The Day at a Glance | July 30 2024

The Top

• Mexico´s economy is losing momentum, according to second quarter GDP preliminary figures.

• The Eurozone´s GDP grew slightly more than anticipated in Q2 2024, but the outlook remains weak for the rest of the year.

• On Tuesday, Chinese officials indicated that the stimulus measures necessary to meet this year’s economic growth target will be aimed at consumers, deviating from their usual practice of investing funds in infrastructure projects.

• The US Secretary of Defense said he did not believe a fight between Hezbollah and Israel was inevitable, though he expressed concern about the potential for escalation after a deadly rocket attack in the Israeli-occupied Golan Heights.

• Oil remains near its lowest level since early June amidst concerns over demand in China.

Economic Environment

Mexico´s economy is losing momentum, according to second quarter GDP preliminary figures. The economy grew by 0.2% quarter-on-quarter in Q2 2024, in line with preliminary seasonally adjusted figures. This preliminary figure set below the market consensus estimate and our own estimate of 0.4% quarterly growth. The adjustment was due to a decline in the primary sector of -1.7% quarterly, while the secondary and tertiary sectors grew by 0.3%. On an annual basis, and according to original figures, preliminary GDP growth for the second quarter was 2.2%, consisting of the following figures: 2.7% in the tertiary sector, 1.9% in the secondary sector, and -2.7% in the primary sector. In the first six months of the year, the economy grew by 1.9%, also according to original figures. The preliminary GDP figure supports our narrative of economic growth setting below 2.0% in 2024. These figures do not currently change our estimated growth of 1.7% for the entire year.

The Eurozone´s GDP grew slightly more than anticipated in Q2 2024, but the outlook remains weak for the rest of the year. The Eurozone’s economic activity expanded by 0.3% quarter-on-quarter, above the consensus estimate of 0.2% quarterly (0.3% previous). On an annual basis, the Eurozone´s economy recorded an increase of 0.6%, accelerating from the 0.5% observed in Q1 2024 (0.5% previous). By country, France and Italy logged annual growth of 1.1% and 0.9%, respectively. On the other hand, Germany recorded a contraction of -0.1% annually.

Markets and Companies

Main stock indices in the US are trading higher, with the market’s attention focused on the Q2 earnings season and the Federal Reserve’s monetary policy meeting. Regarding earnings reports, results from companies such as Microsoft, Advanced Micro Devices, and Starbucks are expected at today’s close. As for the Fed´s meeting, the market expectsthe organization to keep its reference rate unchanged, making the message concerning the direction of monetary policy crucial. Currently, the market expects two rate cuts this year, the first one in September. In Europe, stock markets are operating mixed as investors digest quarterly reports, with Philips showing positive results while Heineken’s shares declined following a report that set below expectations. In Asia, markets are down, as they are focused on the start of the Bank of Japan’s monetary policy meeting.

In the debt market, the 10-year Treasury bond yield is logging a decline, standing at 4.16%, with the market’s attention focused on the Federal Reserve’s monetary policy meeting that begins today.

In Mexico, the IPC is trading higher, standing at 52,611.9 points.

Regarding the peso’s exchange rate against the dollar, it stands at 18.77 after closing at 18.63 yesterday.

Corporate News

• According to media reports, Delta Airlines might be seeking legal action against CrowdStrike and Microsoft following system failures that led to service disruptions.

• Merck’s shares were down after the pharmaceutical company released a guidance that set below consensus expectations.

• Pfizer reported quarterly revenues and profits above expectations and also revised its annual guidance upwards.