The Day at a Glance | January 6 2024

The Top

• The US Congress will convene to confirmDonald Trump’s election, four years after the Capitol riot.

• On Monday, China’s stock markets and central bank scrambled to defend a falling Yuan and declining equity markets in an effort to calm investors concerned about Donald Trump’s return to the White House.

• Inflation in Germany rose more than expected, reaching 2.9% in December 2024, according to preliminary data from the federal statistics office published on Monday.

• Mexico’s consumer confidence indicator stood at 47.1 points in December 2024 (47.6 prev.), its lowest level in five months, according to seasonally adjusted figures.

• UK PMI´s revealed that business activity growth nearly stalled in December, while firms cut staff at the fastest pace in nearly four years, signaling the impact of declining business confidence after the government’s budget announcement.

• On Monday, Bank of Japan Governor Kazuo Ueda stated that the central bank will raise interest rates if the economy continues to improve, while emphasizing the importance of considering various risks before deciding on the right time to act.

• Oil prices held steady at their highest levels since mid-October, driven by colder weather boosting demand and additional support from expectations of stricter sanctions on Iranian and Russian oil exports.

Economic Environment

The US Congress will convene to certify Donald Trump’s election, four years after the Capitol riot. Congress is set to officially confirm Donald Trump’s election as president, marking his return to the White House after a contentious first term. With a strong electoral result granting him 312 Electoral College votes and majority in both legislative chambers, Trump is positioned to push his agenda, including tax cuts, stricter immigration measures, and new trade tariffs targeting key partners such as China, Mexico, Canada, and the European block. However, his return raises questions about the economic impact of these policies. While tariffs could increase the prices of imported goods and immigration restrictions may pressure wages, leading economists like Ben Bernanke and Christina Romer believe the inflationary effect will be moderate. More specifically, Bernanke pointed out that while immigration restrictions could boost wages, they would also decrease domestic demand, mitigating inflationary pressures. Additionally, Congress may limit the expansion of tax cuts due to concerns over the increasingnational debt. Overall, the US economy – which Trump is taking over with solid 3% growth and historically low unemployment at 4.2% – maintains positive momentum due to consumer and business confidence. Nonetheless, economists warn of risks related to potential interference with the Federal Reserve´s independence, a factor that could destabilize financial markets and complicate inflation control efforts. As such, Trump’s policies may pose short-term challenges; however, the US economy stands a good chance of remaining on a stable trajectory thanks to its current strength. As Trump prepares to take office on January 20^th, attention will focus on how he balances his political agenda with economic complexities and global challenges.

Markets and Companies

US futures rebounded after a losing week, driven by chipmakers and tech stocks. Chip-related futures led the gains after Foxconn reported record fourth-quarter revenue. Nvidia and Broadcom rose over 1.5% and 2.5%, respectively, while Micron Technology climbed 5%.

In Europe, markets traded higher, supported by the tech and automotive sectors, as investors assessed a report suggesting that US President-elect Donald Trump’s tariff plans might not be as extreme as initially feared.

In Asia, markets mostly declined as investors digested business activity data from several key economies in the region.

Regarding commodities, oil prices stabilized at their highest level since mid-October, boosted by colder weather and expectations of stricter sanctions on Iranian and Russian oil exports. Metals are mostly up, and cryptocurrencies are also trading higher.

In Mexico, IPC futures are up +1.48%. 

Over the weekend, the exchange rate fluctuated between a low of 20.27 and a high of 20.69, currently standing at 20.30.

Corporate News

• Shares of American Airlines rose more than 4% after TD Cowen upgraded the airline’s rating from “hold” to “buy” and raised its price target to the highest level on Wall Street.

• FuboTV shares soared over 60% following a Bloomberg report that the company is nearing a deal to merge its online live TV businesses with Walt Disney.l