The Day at a Glance | January 25 2024

*The European Central Bank kept its interest rates unchanged.

*The U.S. economy grew by 3.3% in the fourth quarter of 2023 and 2.5% throughout 2023.

*In Mexico, the unemployment rate stood at 2.6% in December 2023 (previously 2.7%).

*Germany´s economy weakens towards 2024 as business sentiment declines.

*British retail sales fell in January at their fastest pace in three years.

*U.S. markets move forward as positive GDP data for 4Q23 emerges.

Economic environment

The European Central Bank (ECB) left its interest rates unchanged. This decision was widely expected by the market. Today, the ECB also decided to keep the refinancing, loan and deposit rates at the same level, 4.50%, 4.75% and 4.00%, respectively. This decision was based on a rebound in inflation at the end of last year, energy issues, declining core inflation and financial conditions resulting in weakened demand. The Governing Board of the ECB considers that rates should remain unchanged for a long period of time in order to achieve medium term 2% objective in inflation. No changes were made regarding the asset purchase programs (APP) and the pandemic emergency purchase program (PEPP).

The US economy expanded annually 3.3% in the final three months of 2023. The reading of 4Q23 US GDP setwell above market expectations at 1.9%. The increase in the fourth quarter of last year is based on the growth in consumer spending, exports, state and local government spending, non-residential fixed investment, federal government spending, investment in private inventories and fixed investment. Considering 2023, the US economy grew 2.5% compared to 1.9% in 2022.

Markets and companies

Markets in the US advance after publication of the 4Q23 GDP. At the end of yesterday´s session, the Nasdaq and the S&P500 each one rose for the fifth day in a row. The S&P increased only +0.08%, but still managed to reach a new all-time closing record. At the same time, the Nasdaq was led by a broad technological rally and closed the day with an increase of +0.36%. The Dow Jones was dragged down by drops of more than 2% in Verizon and 3M, they published quarterly reports on Tuesday. This morning, investors were surprised by positive GDP data in the US (+3.3% vs +2%e.). The result is a key catalyst for shares as investors seeked details on economic data at the beginning of the year. According to Refinitiv, more than 16% of S&P500 companies have published quarterly results this season. Approximately eight out of ten have exceeded Wall Street expectations regarding profits. The S&P500 is up +0.69, the Nasdaq +0.88%, and the Dow Jones +0.39%. In Europe, markets log downward movements as the region´s central bank met market expectations on Thursday by maintaining interest rates at their current record level. Auto stocks fell -1.3%, while media stocks rose +0.4%. In Asia, the actions of China and Hong Kong led gains after People’s Bank of China announced which would reduce reserve requirements for the country’s lenders. It is expected that the measure alleviates a persistent cash shortage for real estate developers. In Mexico, IPyC futures are rising (+1.45%) and standing at $56,225 points. Oil prices were boosted due to stronger than expected US economic growth, stimulus in China and declining domestic crude oil reserves: WTI +1.1%, Brent +1.0%. Natural gas prices slightly up (+0.15%). An ounce of gold is at $2,018, silver is at $22.88 dpo and copper at $387.70 dpp. Finally, cryptocurrencies register mixed movements. After yesterday´s trading session, the exchange rate fluctuated at a minimum of 17.22 and a maximum of 17.27, currently trading at 17.22.

Corporate news

*Hertz stocks fell 2.6% after being downgraded to “neutral” by JPMorgan. The bank cited a “failed electric vehicle strategy,” resulting in estimated losses of $0.5 billion.

*Tesla drops by 8% after reporting fourth-quarter results that missed both revenue and profit estimates.

*IBM rises by 7% after surpassing fourth-quarter estimates.

*Boeing declines by 2.6% as the Federal Aviation Administration’s (FAA) production limit on Boeing’s 737 Max model, involved in the Alaska Airlines incident, is likely to hinder the airline from reaching its production goals.

*Paramount Global increases by 3.4% following news that Skydance Media was exploring a deal to acquire Paramount Global and take the company private.

*Vericel, a manufacturer of sports medicine and severe burn care, rises by 4% after Truist upgraded Vericel from “hold” to “buy”.