The Day at a Glance | January 26 2024

*Mexico’s trade balance in December showed a significantly larger surplus than expected. 

*PCE inflation remained unchanged in December at a level of 2.6%, in line with estimates. 

*U.S. President Joe Biden halted the approval of new liquefied natural gas export projects, a victory for climate activists. 

*Chinese officials have urged their Iranian counterparts to help curb attacks on ships in the Red Sea by Iran-backed Houthi rebels. 

*The World Court orders Israel to prevent acts of genocide but does not call for a ceasefire.

*Intel stock dragged U.S. markets down but recovered ground this morning.

Economic environment

Mexico’s trade balance recorded a surplus worth $4.242 billion in December. This figure is higher than the market estimate of $1.4 billion and the $0.983 billion observed in the same period last year. There was a slight decline in exports, with a year-on-year contraction of -0.2%, stemming from an -8.7% decrease in oil exports and a 0.4% growth in non-oil exports. Among non-oil exports, those directed to the U.S. increased by 2% annually, while those directed to the rest of the world decreased by -7.5%. On the import side, there was a negative reading of -6.9% year-on-year. The decline in December is explained by non-oil imports, which contracted by -2.3% year-on-year and -45.8% year-on-year in oil imports. Considering the entire year, the trade balance logged a deficit worth $5.464 billion, compared to the $26.879 billion deficit reported in 2022. This was mainly due to an expansion of the surplus in the non-oil product balance and a smaller deficit in the oil product balance.

Markets and companies

Global markets with a positive sentiment. U.S. index futures fell this Friday but are recovering ground as quarterly reports are evaluated, most of which are disappointing, including one that caused chip manufacturer Intel to sharply decline. The S&P500 leads this morning with an increase of 0.50%. The Dow Jones continues above 38,000 points, standing at 38,161 (+0.29%). The Nasdaq rose +0.32%. Meanwhile, the yield on the 10-year Treasury bond decreased by 1 basis point to 4.10%. In Europe, markets are on the rise with EuroStoxx +1.10% as they digest the latest decision from the European Central Bank and new economic data from the United Kingdom and the United States. In Asia, markets are mixed, with electric vehicle stocks like Tesla falling for the second consecutive day and analyzing Tokyo’s inflation data. China is up +0.14%, and Japan’s Nikkei 225 fell by 1.34% to 35,751.1. In Mexico, IPC futures continue to rise, reaching 56,957 points (+1.42%). Oil prices retreat but may close higher due to positive economic data from the United States and China, as well as a reduction in crude oil inventories in the United States. The price is set at $76.60 per barrel. Natural gas prices rose by 0.35% after weather reduced demand, although colder temperatures in the future and concerns about delays in liquefied natural gas (LNG) shipments limited losses. Gold increased, with an ounce trading at $2,025, silver at $22.88 per ounce, and copper at $386.90 per pound. Lastly, cryptocurrencies are increasing, with Bitcoin trading at 41,143 (+3.40%).

After yesterday’s trading session, the exchange rate fluctuated between a minimum of 17.14 and a maximum of 17.21, currently quoting at 17.15.

Arca Contal announced yesterday that it successfully concluded the issuance of $6.05 billion Mexican pesos in Bond Certificates. The placement consisted of two parts, one for $3.05 billion pesos with a 10-year maturity at a fixed rate of 9.66%, and another for $3 billion pesos with a 3-year maturity at a variable rate equal to TIIE plus 10 basis points. Both parts received credit ratings of AAA.mx from Moody’s and AAA(mex) from Fitch Ratings.

Corporate news

*The Federal Trade Commission (FTC) is investigating artificial intelligence, announcing an investigation into major companies, including Amazon, Alphabet, Microsoft, Anthropic, and OpenAI, to review investments and partnerships being formed.

*Intel falls more than 10% after issuing first-quarter guidance below expectations.

*American Express rises 3% after the company issued an annual guidance that exceeded expectations, although fourth-quarter results were weaker than expected.

*T-Mobile: The telecommunications company fell 2% after posting mixed results in the fourth quarter. Earnings per share were $1.67, below the analysts’ expected $1.91, but revenues of $20.48 billion exceeded the forecast of $19.67 billion.

*Visa falls 3% despite beating quarterly estimates. The company raised its guidance for operating expenses and mentioned that payment volumes have slowed in January.

*Coinbase gains more than 4%, driven by an increase in the price of bitcoin.