The Day at a Glance | January 24 2024

*In Mexico, general inflation for the first half of January surprised to the upside. 

*The Central Bank of China announced a 50 basis point cut in the banks’ reserve requirement ratio (RRR) for February 5th. This is a liquidity injection into the system. 

*The Eurozone´s Manufacturing Purchasing Managers’ Index (PMI) mentions disruptions in trade due to conflicts in the Red Sea and increased price pressures.

*Former President Donald Trump won the primaries in New Hampshire.

*Tech companies are leading the way this week.

Economic environment

In Mexico, general inflation for the first half of January surprised to the upside. Today, INEGI released the National Consumer Price Index for the first half of January, where an increase of 0.49% was recorded, above the market estimate (0.38%), and ours (0.34%). Meanwhile, core inflation, which excludes the more volatile items such as energy and agricultural products, and government fees, increased by 0.25% in the first half of January. The statement highlights that the three items with the greatest impact on inflation for that fortnight were tomatoes, diners, sandwich shops, and onions. In the year-on-year change, general and core inflation for the first half of January was 4.90% and 4.78%, respectively. The surprise in the inflationary data is mainly attributed to an increase in non-core inflation, a factor that will exert pressure going forward due to the low comparison base from last year.

Markets and companies

Global markets with positive sentiment. US index futures are in positive territory. The Nasdaq leads this morning with a 1.60% increase. With a strong tech presence, index futures rose this morning, driven by a 9% increase in Netflix shares. The Dow Jones remains above 38,000 points, standing at 38,234 (+0.87%). The S&P 500 rose +1.18%. Meanwhile, the yield on the 10-year Treasury bond is above 4.10%. In Europe, markets are on the rise with EuroStoxx +1.84% as preliminary Purchasing Managers’ Index (PMI) data showed an improvement in activity in the Eurozone in January. In Asia, markets are mixed, with China up +1.80% and Japan’s Nikkei 225 falling 0.8% to 36,226.48, extending losses from Tuesday. In Mexico, IPC futures continue to rise, standing at $56,438 points (+1.68%). Oil prices dipped slightly on Wednesday as US gasoline inventories increased significantly, suggesting weakening demand in the world’s largest economy. Libya restarts production at the Sharara oil field, with the capacity to produce 300,000 barrels per day. The price is set at $74.70 per barrel. Natural gas prices are up 2.00%, although LNG deliveries from Qatar may be delayed due to disruptions in the Red Sea, although production is not affected. Gold gained on Wednesday due to a lower dollar, as economic data from the United States is awaited for more clues on the speed and magnitude of Federal Reserve interest rate cuts. The price of gold is at $2,036 per ounce, silver is trading at $22.95 per ounce, and copper at $388.00 per pound. Finally, cryptocurrencies are advancing. After yesterday’s trading session, the exchange rate fluctuated between a minimum of 17.19 and a maximum of 17.31, currently quoting at 17.20.

The National Association of Supermarkets and Department Stores (ANTAD for its acronym in Spanish) reported sales for the month of December 2023. Same-store sales, which includes sales from stores that have been in operation for at least one year, increased by +5.2%. On the other hand, total store sales increased by +8.5% compared to the same period in 2022.

Corporate news

*Netflix added 13.1 million subscribers during the fourth quarter, surpassing expectations and previous increases. Netflix now has 260.8 million paying subscribers, and its quarterly results showed a significant year-on-year increase in revenue and profits.

*The US Federal Aviation Administration plans to keep the Boeing fleet grounded until it can be sure that the aircraft manufacturer’s quality control system is functioning.

*AT&T shares fell more than 2% after reporting 4Q23 results.

*Alibaba rose nearly 6% after it was reported that founder Jack Ma bought $50 million in company shares on the Hong Kong Stock Exchange in the fourth quarter.

*Tesla increased by 1.3% ahead of its quarterly results, expected after the market close on Wednesday.

*Shares of the German software company SAP rose 7.3% after announcing on Tuesday that, as part of restructuring efforts for this year, the company aims to implement voluntary layoffs or facilitate job changes for 8,000 employees.