The Day at a Glance | July 2 2024

The Top

• In Mexico, gross fixed investment and private consumption increased by 18.1% and 8.0% in April. 

• The Eurozone’s annual inflation rate stood at 2.5% in June. 

• Credit rating agency S&P warned the US, France, and other major economies about their debt levels. 

• Opponents of France’s National Rally (RN) intensified their efforts to block the far-right party’s power, with more candidates withdrawing from the second round of this weekend’s elections to avoid splitting the anti-RN vote. 

• Japan’s Finance Minister stated that authorities are monitoring sharp currency market movements as the yen continues to hit new 38-year lows against the dollar. 

• Oil prices extended their gains to two-month highs on Tuesday due to expectations of increased summer demand and potential supply disruptions from Hurricane Beryl.

• Nvidia shares fell nearly 2%, as did other tech stocks; Meta Platforms and Apple recorded slight losses.

Economic Environment

In Mexico, gross fixed investment and private consumption increased by 18.1% and 8.0% in April. Fixed investment in construction rose by 16.8%, and it did the same in machinery and equipment by 19.5% on an annual basis, according to non-seasonally adjusted figures. By sector, private investment increased by 19.1% year-over-year, and public investment by 9.4% year-over-year. Within the private sector, construction expanded by 18.0%, and machinery and equipment by 20.1%, while the public sector logged growth rates of 10.5% and 4.9%, respectively. Private consumption in Mexico reported an 8.0% year-over-year increase, according to original figures. Within this, spending on imported goods increased by 39.1% year-over-year, while spending on domestic goods and services decreased by 3.2% year-over-year, according to original figures. On a monthly basis, gross fixed investment increased by 0.9%, while consumption fell by -0.9%, according to seasonally adjusted figures. April´s data was mixed; on one hand, investment resumed its growth path, while private consumption showedsigns of moderation, especially since domestic consumption increased by only 1.3% in the January-April period. Overall, the data aligns with expectations of slower growth.

The Eurozone’s annual inflation rate stood at 2.5% in June, in line with market expectations and below the 2.6% logged in May. In June, food, alcoholic beverages, and tobacco recorded a 2.5% year-over-year inflation rate, services increased 4.1% year-over-year, non-energy industrial goods increased by 0.7%, and energy did the same by 0.2% year-over-year. The annual inflation rate recorded among the European block´s major economies decreased between May and June this year; for example, in Germany, it fell from 2.8% to 2.5%, and in France, it decreased from2.6% to 2.5%. Overall, the Eurozone´s inflation returned to a downward trajectory, although the services component remains very high, which could cause concern for some ECB officials.

Markets and Companies

Global markets carry mixed sentiment. Major US indices closed yesterday’s session with gains. Today, they are in mixed territory: The S&P is down -0.18%, the Dow -0.06%, while the Nasdaq is up +0.06%. Meanwhile, the 10-year Treasury bond yield stands at 4.42%.

In Europe, the Euro Stoxx index is down -0.78%, with most sectors in negative territory; insurance stocks were down -2.2%, while oil and gas stocks rose by +1.1%.

In Asia, Japan’s Nikkei 225 rose by +1.12% to close at a three-month high of 40,074.69. China ended slightly higher at 2,997 (+0.08%).

In Mexico, the IPC is down and stands at 52,757.6 points (-0.24%).

Oil prices exceeded $84 per barrel, reaching a two-month high, due to growing concerns that a war between Israel and Hezbollah and an active hurricane season in the Gulf of Mexico might disrupt supply. Today, the price is $83.73 per barrel.

Gold is up +0.1%, standing at $2,334 per ounce. Silver is trading at $29.67 per ounce (+0.8%), and copper at $4.44 per pound (+0.7%). Lastly, cryptocurrencies are up.

After yesterday´s trading session, the exchange rate fluctuated between a low of 18.30 and a high of 18.47, currently trading at 18.29.

Corporate News

• Tesla shares rose 4% after the company posted stronger-than-expected second-quarter delivery figures. Deliveries for the period were 440,000, exceeding a consensus estimate of 436,000. Additionally, Tesla reported producing 411,000 vehicles.

• Paramount Global rose more than 3% following news that its streaming division was in talks with several companies about a possible merger. One of the parties involved is Warner Bros. Discovery, which could potentially see Paramount+ merge with Max.