The Day at a Glance | March 21 2024

*In January, retail sales in Mexico recorded a surprising -0.8% annual decline. 

*Eurozone PMI´s show that the block´s economy is approaching stabilization in March. 

*Yesterday afternoon, the Federal Reserve announced its monetary policy statement, in which they kept the federal funds rate range between 5.25% and 5.50% and left the federal funds rate expectation at 4.6% by year-end. 

*Tomorrow, Mexico will release inflationary data for the first half of March; we estimate it will set at 4.47% year-on-year. 

*IMF Managing Director Kristalina Georgieva warned on Thursday that central banks face growing political pressure to cut interest rates during a major election year but authorities must maintain their independence.

*Stock markets maintain optimism. In the U.S., the main indices are trading higher, with the S&P 500 reaching levels above 5,200 points.

*Stock markets maintain optimism. 

Economic environment

In January, retail sales in Mexico recorded a surprising -0.8% annual decline. This reading set below the consensus expectation of 1.2% year-on-year and the previous -0.2% year-on-year. Notably, annual declines were seen in textile products (-12.9%), stationery (-8.8%), and hardware (-7.6%). Additionally, there were more moderate decreases in groceries and food (-1.7%) and motor vehicles (-1.6%). On the positive side, there was a significant increase in online sales (7.4%), while self-service stores (3.0%), health items (3.4%), and household goods (4.3%) also logged annual increases. On a seasonally adjusted monthly basis, retail sales fell again (-0.6%) in January after a sharp decline in December (-1.0%), far from the consensus estimate of a 0.4% increase in January. In summary, retail sales have fallen month-on-month in six of the last seven months, indicating that the restrictive monetary policy may be weighing on household consumption.

Eurozone PMI´s show that the block´s economy is approaching stabilization in March. The Eurozone’s composite PMI stood at 49.9 points, up from January’s 49.2, marking its highest level in the last nine months. The manufacturing PMI set at 45.7 points, below the estimated 47.0, marking 12 consecutive months below the 50-point threshold. Meanwhile, the services sector index recorded its highest level in nine months, rising from 50.2 points in February to 51.1 points in March. The reading boosted a modest recovery in the services sector activity. Overall, the rebound in the Eurozone was affected by persistent declines in activity in France and Germany, offsetting a rebound in the rest of the Eurozone, which suggests that there is an uneven economic situation

Markets and companies

Stock markets maintain optimism. In the U.S., the main indices are trading higher, with the S&P 500 reaching levels above 5,200 points. Investors are digesting the statement from the latest Federal Reserve monetary policy meeting, where, as expected, the agency maintained its expectation of carrying out three interest rate cuts this year. The market assigns a higher probability for rate cuts to occur in the latter part of the year. Regarding corporate news, FedEx and Nike will report quarter earnings at the market close.

In Europe, the stock market showed a positive trend, with the Stoxx 600 index reaching a new high. The Bank of England kept its reference rate unchanged, as expected. In Asia, the main stock indices also showed positive performance, with the Nikkei 225 reaching a new high.

In the bond market, the yield on the 10-year Treasury bond recorded a slight decline, standing at 4.26%, while the 2-year bond stood at 4.6%.

Concerning commodities, oil prices logged declines, with the WTI at 81.06 dollars per barrel while Brent traded at 85.76 dollars per barrel. Gold maintains its upward trend and is priced at 2,196.2 dollars per ounce.

In Mexico, the IPC operates with gains, reaching 56,742.9 points.

The peso-to-dollar exchange rate was trading higher, at $16.75, after closing at $16.68 yesterday.

Corporate news

*Micron shares rose nearly 16.5% as the company reported better-than-expected revenue and earnings. Additionally, the company’s guidance for the next quarter exceeded expectations.

*According to reports, the Department of Justice could file a lawsuit against Apple for anti-competitive practices.

*Darden Restaurants’ stocks fell as the company reported revenues below expectations. On the other hand, the company authorized a share repurchase program worth one billion dollars.

*Li Auto announced that it expects to deliver 77 thousand electric vehicles in 1Q24, a figure lower than the previous expectation of 101.5 thousand.