The Day at a Glance | June 4 2024

The Top

• In Mexico, gross fixed investment and private consumption increased by 3.0% and 1.6% in March.

• The U.S. manufacturing ISM contracted for a second consecutive month in May.

• The Mexican peso´s volatility continues as it reached 18.20 pesos per dollar during the early morning. At market open, it stands at 17.75 pesos per dollar.

• The Vice Governor of the Bank of Japan, RyozoHimino, stated that the central bank must closely monitor the impact of the yen´s movements on the economy, suggesting that the currency’s weakness will be one of the factors influencing the timing of the next interest rate hike.

• In Mexico, 119,985 light vehicles were sold to the public in the domestic market during May. In the first five months of 2024, 585,721 units were sold.

• Main U.S. indices opened mixed and continue their weak trend at the beginning of June. 

Economic Environment

In Mexico, gross fixed investment and private consumption increased by 3.0% and 1.6% in March. Investment in construction increased by 9.4% while it decreased in machinery and equipment by -3.4% year-on-year, according to seasonally unadjusted figures. By sector, private investment increased by 2.3% year-on-year and public investment did the same in 9.5% year-on-year. Within the private sector, construction grew by 9.2% and machinery and equipment fell by -3.7%, while the public sector logged10.8% and 4.2% figures, respectively. Private consumption in Mexico recorded an annual 1.6% year-on-year increase,according to original figures; spending on imported goods increased by 11.3% year-on-year and fell by -0.3% year-on-year on domestic goods and services, according to original figures. Gross fixed investment and consumption each grew by 0.8% month-on-month, according to seasonally adjusted figures. March´s data indicates what the IGAE suggested for March: A moderation in growth at the end of the first quarter. However, timely data suggests that we should see greater momentum in the economy in the second quarter.

The U.S. manufacturing ISM contracted for a second consecutive month in May. In May, the ISM indicator stood at 48.7 points, below the consensus estimate of 49.7 points and the 49.2 points logged in April. This performance was mainly due to the largest drop in new orders in almost two years (45.4 vs. 49.1 prev.). Production (50.2 vs. 51.3 prev.) slowed down but remained in expansion territory. Additionally, there was a contraction in inventories and order backlogs, while employment rebounded and price expectations continued to increase, although at a slower pace. Consequently, the U.S. GDP Now growth model´sestimate for the second quarter of the year fell from 2.7% to 1.8%.

Markets and Companies

Global markets carry negative sentiment. Main U.S. indices closed mixed yesterday. Today, the Dow is up +0.02%, the S&P is down -0.34%, and the Nasdaq is down -0.15%. Meanwhile, the 10-year Treasury yield stands at 4.35% after economic data in the United States was released. In Europe, the Euro Stoxx 600 fell by -0.44% with the vast majority of sectors in the red; mining stocks lost -2.1% while utilities gained the most, rising by +0.7%. In Asia, markets closed mixed. Japan’s Nikkei 225 was down -0.22% andclosed at 38,837.46. Meanwhile, China was up +0.41%, closing at 3,091.2. The Nifty 50 index dropped around 5%, dragging Asian markets down as the country continues to count votes amidst its 2024 general elections. In Mexico, the IPC is up and stands at 52,011 points (+0.39%). Oil prices extend their losing streak and are set to erase most of the year’s gains after OPEC+ announced plans to increase production starting in October. The price is at $73.15 per barrel. Natural gas prices are down -0.91%. Gold fell by -1.0% to $2,326 per ounce. Silver is trading at $29.45 per ounce (-4.2%) and copper at $454.30 per pound (-2.7%). Lastly, cryptocurrencies are mixed.

After yesterday´s trading session, the exchange rate fluctuated between a low of 17.44 and a high of 18.11, currently trading at 17.79.

Fibra Mty has decided not to proceed with the potential voluntary public offer to acquire up to 100% of the outstanding CBFIs issued by Terrafina. Instead, the company announced that the Technical Committee of FibraMty approved presenting Terrafina with an alternative structure, through which Fibra Mty will transfer all of its real estate assets to Terrafina and receive Terrafina certificates as compensation.

Corporate News

• GameStop shares fell around 5% after a 21% surge in the previous session.

• Intel rose more than 1% after the company announced new AI chips aimed at competing with Nvidia and AMD.

• Maersk shares increased by 2.1% after raising its full-year profit forecast due to strong market demand and ongoing disruptions in the Red Sea.