The Day at a Glance | March 22 2024

*In Mexico, the general inflation rate for the first half of March stood at 4.48%, in line with our forecast of 4.47%.

*The Global Economic Activity Indicator (IGAE) registered a downside in January.

*U.S. Secretary of State Antony Blinken met with Israeli Prime Minister Benjamin Netanyahu to hold discussions aimed at ensuring further aid flows to Gaza.

*The U.S. Congress rushes to approve a $1.2 trillion spending bill to avoid a government shutdown at midnight.

*Bank of Japan Governor Kazuo Ueda stated that the central bank will eventually reduce bond purchases and allow market forces to set long-term interest rate movements.

*The U.S. stock indexes are currently on four-day winning streaks, reflecting the bullish trend in the financial markets.

Economic environment

In Mexico, the general inflation rate for the first half of March stood at 4.48%, in line with our forecast of 4.47%. Today, INEGI released the National Consumer Price Index for the first half of March, showing a variation of 0.27%, in line with our forecast of 0.27% and above the market estimate of 0.24%. Meanwhile, core inflation, which excludes volatile items such as energy and agricultural products, and government fees, grew by 0.33% in the first half of March, above our estimate (0.23%) and the market’s (0.25%). On an annual basis, the general and core inflation rates for the fifth half of the year were 4.48% (previously 4.35%) and 4.69% (previously 4.66%), respectively. Within core inflation, service inflation stood at 5.57% (previously 5.31%), and goods at 3.96% (previously 4.12%). Core inflation halted its decline for the second consecutive half, as it was at 4.63% in the first half of February and two halves later stands at 4.69%, aligning with our view that this last mile in inflation decline will be slow and challenging.

The Global Economic Activity Indicator (IGAE) registered a downside in January. In Mexico, the IGAE, a proxy for monthly GDP, surprised with a -0.6% month-on-month seasonally adjusted decline, against an expected consensus growth of 0.3%. The January decline was mainly due to a plunge in primary activities by -12.9% month-on-month and a retreat in tertiary activities by -0.5% month-on-month. Secondary activities grew by 0.4% month-on-month in January. On an annual basis and according to original figures, the IGAE grew by 2.0% in the first month of 2024. By sectors, the annual growth in January was as follows: primary -9.1%, secondary 2.9%, and services 2.2%. The decline in January marks the fourth consecutive monthly decline in the IGAE, raising the possibility of stagnation or a slight decline in GDP in 1Q24

Markets and companies

Today, global markets exhibit a mixed sentiment. U.S. leading indexes closed the previous day with gains. The Dow, S&P, and Nasdaq recorded notable weekly increases of +2.7%, +2.4%, and +2.6%, respectively. However, at today’s opening, we observe a slight downward trend: the Dow is down -0.15%, the S&P is down -0.02%, and the Nasdaq is down -0.24%. In Europe, markets are showing losses, with the Euro Stoxx falling -0.47% and most sectors in negative territory. Specifically, technology stocks lead the declines, with a decrease of -1.5%. In Asia, stock markets closed with mixed results: Japan’s Nikkei 225 briefly reached a new all-time high, crossing the 41,000 mark, while the country’s inflation accelerated in February. On the other hand, China experienced a decline of -0.95%. In Mexico, the IPC index stood at $56,662 points. In the energy market, the price of oil increased, reaching $81.15 per barrel (+0.1%). However, gasoline products supplied in the United States fell below 9 million barrels for the first time in three weeks, indicating a possible slowdown in crude demand. Natural gas also declined by -1.50%. As for metals, most experienced losses, with gold dropping by -0.1%, silver rising by +0.7%, and copper falling by -0.8%. Finally, cryptocurrencies retreated.

After yesterday´s trading session, the exchange rate fluctuated between a minimum of 16.71 and a maximum of 16.82, currently trading at 16.73.

Arca Contal reported that in 2024 it will make investments totaling an estimated MXN 17 billion across its various operations. This estimated amount surpasses the Capex recorded in 2023 (MXN 12.85 billion). According to the announcement, the funds will primarily be allocated to increasing production and distribution capacity, promoting the use of digital tools, strengthening new beverage categories, and expanding shared value projects in the communities it serves in Mexico, Ecuador, Peru, Argentina, and the USA. By region, approximately 55% of the total resources will be invested in its operations in Mexico, while the remaining 45% will be allocated to the USA and South America

Corporate news

*Shares of Reddit surged nearly +50% on their first day of trading on Thursday, closing the session at $50.44 each and reaching an approximate market value of $9.5 million.

*FedEx shares rose by 11.5% after reporting adjusted earnings that exceeded analyst estimates.

*Conversely, Lululemon saw a 13% decline after the athletic apparel retailer announced weak guidance due to slowing growth in North America.

*Nike experienced a 6% decline due to disappointing guidance and a slowdown in sales in China.