The Day at a Glance | July 31 2024

The Top

• China’s economy continues to moderate in July.

• Eurozone inflation surprises to the upside in July due to a rebound in energy. 

• The Bank of Japan raised the benchmark rate from 0.1% to 0.25% in a divided decision (7-2) and announced it will reduce asset purchases by 400 billion yen per quarter to about 3 trillion yen in the first quarter of 2026.

• The Federal Open Market Committee’s monetary policy announcement will be released this afternoon, and we expect the federal funds rate range to remain unchanged between 5.25% and 5.50%.

• The ADP private employment survey recorded thecreation of 122,000 jobs, below the 150,000 expected by the market consensus.

Economic Environment

China’s economy continues to moderate in July. China´s composite PMI stood at 50.2 points in July, down from 50.5 in June and 51.0 in May. The non-manufacturing PMI also came in at 50.2 points (50.5 prev.), marking nineteen consecutive readings above the 50-point threshold but showing signs of weaker momentum. The manufacturing PMI slightly declined from 49.5 points in June to 49.4 in July, although in line with market expectations. This marks the third consecutive month the manufacturing indicator has stayed below the 50-point threshold, indicating contraction. The first figure for the third quarter is not encouraging in terms of economic growth, as it again shows an economy with reduced momentum. However, it is important to note that just last week the People’s Bank of China cut interest rates in an effort to stimulate the economy, so we need to wait and see if these measures are enough to bolster economic growth.

Eurozone inflation surprised to the upside in July due to a rebound in energy. Annual inflation in the Eurozone set at 2.6% in July 2024, above consensus expectations and the previous month’s 2.5%. By components, food, alcoholic beverages, and tobacco recorded an inflation rate of 2.3% year-on-year (previous 2.4%), services set at 4.0% year-on-year (previous 4.1%), non-energy industrial goods at 0.8% year-on-year (previous 0.7%), and energy at 1.3% year-on-year (previous 0.2%). Annual inflation in the Eurozone´s major economies increased between June and July; for example, in Germany and France, it rose from 2.5% to 2.6%, while in Italy, it jumped from 0.9% to 1.7%. The inflation data could reverse expectations of a rate cut by the European Central Bank in September.

Markets and Companies

The S&P 500 is up. The S&P 500 is rising today as investors digest the latest quarterly reports and prepare for the Federal Reserve’s decision. The Fed is expected to conclude its two-day meeting today, with expectations that the central bank will keep rates steady. In Europe, markets maintained positive momentum, trading higher after Eurozone inflation unexpectedly rose. The Stoxx 600 was up 0.94% at 2:14 p.m. London time, with tech stocks jumping 3.02%. In Asia, markets rose on Wednesday as investors assessed China’s business activity data, with Japan’s Nikkei reversing course to log gains after the country’s central bank raised benchmark interest rates to 0.25%. Regardingcommodities, US crude oil is up more than 3% following the assassination of a Hamas political leader in Tehran, renewing fears that the Middle East is on the brink of a regional war. Metals and cryptocurrencies are also up. In Mexico, the IPC is up +1.25% and stands at 52,980 points.

After yesterday´s trading session, the exchange rate fluctuated between a low of 18.67 and a high of 18.87, currently trading at 18.68.

Corporate News

• Pinterest shares fell 11% after its guidance came in below estimates.

• Advanced Micro Devices shares rose nearly 9% after the chipmaker’s earnings and revenue beat analyst estimates on Tuesday after the market closed.