The Day at a Glance | June 24 2024

The Top

• In Mexico, general inflation for the first half of June surprised to the upside due to a rebound in the most volatile component.

• The President of the United States, Joe Biden, is heading into a crucial debate with his rival Donald Trump this week, prepared with new immigration and border policies that his supporters hope will improve his standing among undecided voters.

• Beijing wants the European Union to discard plans to impose preliminary tariffs on Chinese electric vehicle imports before July 4th, after both parties agreed to negotiate a possible compromise.

• The Bank of Japan discussed the need for a rate hike, indicating possible action in its next meeting in July.

• Oil prices rose slightly on Monday as higher expectations for summer demand countered the strength of the dollar.

• Main US indices are logging mixed figures as the last week of June kicks off.

Economic Environment

In Mexico, general inflation for the first half of June surprised to the upside due to a rebound in the most volatile component. INEGI reported that the National Consumer Price Index for the first half of June logged a bi-weekly change of +0.21%, above our estimate and the consensus´ at 0.12% and 0.14%, respectively. On an annual basis, general inflation for the first half of June was 4.78%, recording a slight acceleration from the 4.59% observed in the second half of May. Meanwhile, core inflation, which excludes the most volatile items, such as energy and agricultural products, as well as government tariffs, increased by 0.17% in the first half of June, practically in line with our estimate and the consensus´ at 0.18% bi-weekly. On an annual basis, core inflation stood at 4.17% in the first half of June, slightly above the 4.11% year-over-year observed in the second half of May. By components, goods increased by 3.33% year-over-year and services did the same in 5.19% year-over-year. Regarding the most volatile items, non-core inflation reported an annual rate of 6.73% for the first half of June, compared to the 0.03% year-over-year reported in the same period in 2023. The inflation data could be considered “good” for the Bank of Mexico, as core inflation was slightly better than the consensus estimate, and the upside surprise in general inflation was due to the most volatile items. However, we do not rule out that in the next announcement, which is scheduled to take place on Thursday, June 27th, they may decide to keep the funding rate unchanged, especially given the recent volatility in the foreign exchange market.

Markets and Companies

Main US indices are logging mixed figures as the last week of June kicks off. The S&P 500 reached an intraday record of 5,505.5 on Thursday and recorded another winning week; it gained +0.6% last week, marking its eighth positive week in nine. However, signs of exhaustion have recently begun to appear, particularly with the sell-off of Nvidia. In Europe, markets are posting positive figures as investors await new economic data and interest rate decisions in the region. The Stoxx 600 was up +0.49% at 2:00 p.m. London time, with most sectors trading in the green. Automobiles were up +1.94% while retail stocks fell -0.56%. In Asia, indices logged mixed figures. Japan’s Nikkei rose +0.54%; the Bank of Japan revealed it discussed raising interest rates during its June monetary policy meeting. Regarding commodities, crude oil prices are on track to record their largest monthly increase in over a year, with supply cuts from Russia and Saudi Arabia tightening supplies amidstreduced fears of a recession. Metals are logging mixed figures, and cryptocurrencies are down. In Mexico, the IPC is down -0.16% and stands at 52,701 points. 

Over the weekend, the exchange rate fluctuated between a low of 18.04 and a high of 18.23, currently trading at 18.04.

Corporate News

• Nvidia fell -1.8%, adding to last week’s decline, with the tech stock retreating around -4% to break an eight-week winning streak.

• RXO surged +12.7% after buying UPS’s Coyote Logistics unit. RXO paid UPS more than $1 billion for Coyote.

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