The Day at a Glance | January 31 2024

The Top

*The International Monetary Fund (IMF) updated its estimates of global growth. 

*In the afternoon, the Federal Open Market Committee will announce its first monetary policy statement of the year. We do not expect substantial changes in the statement. 

*The ADP private employment survey reported the creation of 107 thousand jobs in January. 

*China announces new supports for the real estate sector following the announcement of Evergrande’s liquidation. 

*Preliminary inflation data in France and the Eurozone approach 3.0% in January.

*Global Markets mostly positive. Investors take in quarterly results and await Fed decision.

Economic environment

The International Monetary Fund (IMF) updated its estimates of global growth. The IMF’s forecasts indicate that the world economy will grow 3.1% in 2023, increasing by 1 basis point compared to October´s report. For 2024, the growth forecast was revised upward to 3.1% (previously 2.9%); simultaneously, a growth of 3.2% is estimated for 2025. Projected inflation for 2024 remained at 5.8%, and for 2025, it was revised downward to 4.4%. In contrast to the IMF’s October report, risks in the global outlook are broadly balanced, and the possibility of a soft landing is increasing. On the one hand, the resilience shown by the U.S. and many other major economies has been a very positive surprise, as well as fiscal support in China. In addition, inflation is falling more than expected in almost all regions, which can relax financial conditions going forward. This, together with a more relaxed fiscal policy, could translate into higher growth but with the risk of having to adjust later. On the other hand, new peaks in commodity prices could be seen due to disruptions in supply chains resulting from continuous attacks on ships in the Red Sea, as well as underlying inflation that proves more persistent and keeps monetary conditions tight. Finally, it should be noted that further deterioration in China’s real estate sector could also cause disappointment in global economic growth. Regarding Mexico, the IMF presented a slight upward adjustment compared to the October report, with a growth of 3.4% (previously 3.2%). Regarding 2024, the forecast increased from 2.1% to 2.7%. Lastly, for 2025, it is estimated that the economy will decelerate to 1.5%.

Markets and companies

Global markets are mostly positive. Nasdaq-linked futures, which focus on technology stocks, fell on Wednesday after two large-cap tech giants reported their quarterly results. Wall Street is also awaiting the Federal Reserve’s decision on interest rates. Nasdaq futures are down by -0.22%, while S&P500 and Dow Jones futures are up +0.14% and +0.50%, respectively. After the markets closed yesterday, Alphabet’s shares fell more than -5%, while Microsoft retreated -1.6% after releasing their quarterly reports. Despite mostly positive results from the companies, the decline in Alphabet and Microsoft shares may be more of a profit-taking move. In Europe, stocks show mixed movements as global markets await the Fed’s decision and continue to analyze corporate results. The regional Stoxx 600 index closed Tuesday at its highest level in two years. Although industry movements were limited, with banks rising by +0.8%, while retail stocks fell by -1.9%. In Asia, China’s CSI 300 index fell to its lowest level in five years, dropping by -0.91% after China’s manufacturing activity contracted for the fourth consecutive month in January; Hong Kong’s Hang Seng index declined by -1.78%. In Mexico, IPC futures are seen rising (+1.37%), reaching $58,328 points. Oil prices are on track to record their first monthly gain since September as the U.S. and Iran stand on the brink of a more direct confrontation in the Middle East. The West Texas Intermediate (WTI) contract for March dropped $1.09, or 1.40%, to $76.73 per barrel on Wednesday. The Brent contract for March was trading at $81.90 per barrel, down 97 cents or 1.17%. Natural gas prices are on the rise. Meanwhile, mixed movements and marginal changes are observed in metals: gold +0.1%, silver -0.3%, and copper 0%. Finally, cryptocurrencies are falling. Bitcoin -2.25%, Ethereum -3.07%, XRP -1.54%.

After yesterday’s trading session, the exchange rate fluctuated between a minimum of 17.12 and a maximum of 17.24, currently trading at 17.13.

Yesterday afternoon, Bajío reported its quarterly results slightly above our estimates. It experienced solid growth in margins and profitability. Its portfolio continues to expand steadily. The financial margin increased by +21.5%. Regarding net income, it reached $2,863 million Mexican pesos, with an Earnings per Share (EPS) of $2.32, +30.6% annually. Non-financial income decreased by -17.9% due to effects resulting from the reduction in other net income (expenses) as a consequence of the sales of adjudicated assets. We highlight the good portfolio expansion and its profitability metrics

Corporate news

*Alphabet’s shares fell approximately 6% after the company reported disappointing advertising revenue of $65.52 billion, falling short of the consensus analyst forecast of $65.94 billion.

*Microsoft’s shares initially dropped over 2%, although they recovered some of those losses. Microsoft stated in a release that its revenue increased 17.6% year over year, although its outlook was a bit moderate.

*Boeing reported a narrower loss than expected for the last three months of the year, but its future is still unknown. The company reported an adjusted loss per share of 47 cents versus the 78 cents loss analysts expected.

*AMD’s shares fell 4.3% after posting fourth-quarter earnings Tuesday that came out in line with consensus expectations.

*Tesla’s shares fell 2.9% after a Delaware judge on Tuesday rejected Tesla CEO Elon Musk’s $56 billion pay package, saying that the company’s board of directors failed to prove “that the compensation plan was fair.”

*Starbucks shares rose in premarket trading even after a disappointing financial update for its fiscal first quarter. Starbucks posted earnings per share of 90 cents, falling below analysts’ expectations by 3 cents, according to LSEG.

*Paramount Global’s shares surged more than 13% in premarket trading on news that billionaire entrepreneur Byron Allen submitted a $14.3 billion takeover offer. The deal values Paramount at about $30 billion, including debt and equity.