The Day at a Glance | January 2 2024

The Top

  • Factories in Europe and Asia ended 2024 with weak performance, as risks tied to Donald Trump’s second administration increase.
  • Chinese government hackers stole information from the US Treasury Department office responsible for managing economic sanctions, the Washington Post reported on Wednesday, identifying targets of a cyberattack revealed by the Treasury earlier this week.
  • In the week ending December 28th, initial unemployment insurance claims in the US stood at 211,000 (222,000 expected), down from 219,000 the previous week.
  • UK PMI´s showed that manufacturing activity contracted in December at the fastest pace in 11 months, with manufacturers cutting staff levels due to higher taxes and weak external demand.
  • German conservative leader Friedrich Merz, seen as the frontrunner to succeed Olaf Scholz as chancellor, expressed support for renewed efforts to negotiate a free trade agreement with the US in response to growing trade restrictions, according to remarks made to the German news agency dpa.
  • Taiwan’s Ministry of Defense reported Thursday that Chinese aircraft and warships conducted the year’s first “combat patrol” around the island after Taiwan’s President Lai Ching-te reiterated his willingness to engage in dialogue with Beijing.
  • Oil prices rose on Thursday, the first trading day of 2025, driven by investor optimism about China’s economy and fuel demand following President Xi Jinping’s commitment to fostering growth.

Economic Environment

Factories in Europe and Asia ended 2024 with weak performance, as risks tied to Donald Trump’s second administration increase. Manufacturing activity in Asia and Europe wrapped up 2024 with signs of weakness, weighed down by escalating trade risks linked to a second Trump administration and China’s fragile economic recovery. In the Eurozone, industrial contraction deepened, with Germany, France, and Italy entrenched in a manufacturing sector recession. The Eurozone manufacturing PMI fell to 45.1 in December, its lowest level since mid-2022. Similarly, the UK faced a significant downturn, with industrial activity shrinking at the fastest pace in 11 months. In Asia, activity slowed in China and South Korea, while Taiwan and Southeast Asia showed some signs of recovery. China’s PMI dropped to 50.5, signaling only modest growth, as trade tensions and structural imbalances continued to weigh on its economy. Meanwhile, India’s manufacturing sector maintained its regional leadership but expanded at its slowest pace in 2024. Overall, the global manufacturing outlook will heavily depend on how key economies address structural challenges and escalating trade tensions. In this context, coordinated fiscal and monetary policies will be essential to counteract these risks. Initiatives to boost domestic consumption, diversify supply chains, and pursue multilateral trade agreements will be critical to mitigating the impact of geopolitical frictions and strengthening medium-term growth.

Markets and Companies

Futures for major US indices are up, driven by expectations of further Fed rate cuts and optimism surrounding artificial intelligence. In Europe, markets showed mixed performance, with manufacturing activity contracting in Germany and France during December. In Asia, markets also closed mixed; in China, President Xi Jinping pledged more proactive policies to stimulate economic growth in 2025.

In the commodities market, oil prices rose, boosted by expectations of greater demand in China following Xi’s announcements. Precious metals also posted gains, with gold reaching $2,639 per ounce.

In fixed income, US Treasury yields edged slightly lower, with the 2-year note yielding 4.21% and the 10-year note at 4.53%.

In Mexico, IPC futures traded higher, reaching 50,178 points. Meanwhile, the exchange rate showed slight changes, trading at 20.76 pesos per dollar compared to yesterday´s 20.83.

Corporate News

  • Software company Synaptics announced a collaboration with Google to integrate its machine learning core into Astra hardware, advancing Edge AI solutions.
  • Shares of Bitcoin-related companies like Coinbase and MicroStrategy rose after the cryptocurrency surged past $96,000.

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