The Day at a Glance | May 20 2024

The Top

• Retail sales in Mexico unexpectedly fell in March.

• The Timely Indicator of Economic Activity (IOAE for its acronym in Spanish) estimates that the Mexican economy grew 1.7% in April. 

• Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said on Monday that the Federal Reserve will take time to be confident that inflation is on track to return to the central bank’s 2% target.

• China left its benchmark interest rates unchanged on Monday, in line with market expectations.

• The Prosecutor of the International Criminal Court said on Monday that he requested arrest warrants for Israeli Prime Minister Benjamin Netanyahu, his defense chief, and three Hamas leaders for alleged war crimes.

• Oil prices remained stable on Monday amidst political uncertainty in major producing countries after Iran’s president died in a helicopter crash and Saudi Arabia’s crown prince postponed a trip to Japan due to his father King Salman’s health.

• Main U.S. indices are logging moderate changes after reaching all-time highs last week.

Economic Environment

Retail sales in Mexico unexpectedly fell in March. INEGI reported that retail sales fell by -0.2% in March, on a seasonally adjusted monthly basis. On an annual basis, and according to figures without seasonal adjustment, sales decreased -1.7%, setting well below market expectations which forecasted stagnation. Among the annual figures, only two of the nine categories remained in expansion territory: groceries, food, & beverages (3.6%) and self-service and department stores (4.0%). The categories that fell the most in March were internet-only sales (-18.9%) and stationery items (-14.9%). The retail sales report reveals that the economy stumbled in March, after growing in February and falling in January, indicating weakness in private consumption figures during March.

The Timely Indicator of Economic Activity (IOAE) estimates that in April 2024, the Mexican economy grew by 1.7%, according to seasonally adjusted figures. By components, industrial production, an indicator that includes construction, manufacturing, electricity generation, and mining, possibly grew by 1.6% in April, after growing 2.1% in March. On the services side, it is estimated that they grew by 2.2% year-on-year in April, after increasing by 3.1% year-on-year the previous month. On a monthly basis, the Mexican economy is expected to grow marginally by 0.1% during April; however, it is noteworthy that the IOAE estimates that both secondary and tertiary activities did not grow in April after logging 0.6% (observed) and -0.3% (estimated) in March, respectively. The IOAE figure suggests that the final GDP figure for the first quarter, which will be released this week, might be slightly lower than the preliminary figure (0.2% quarter-on-quarter, seasonally adjusted).

Markets and Companies

Main U.S. indices are logging moderate changes after reaching all-time highs last week. The Dow Jones, for example, hit the 40,000-point level for the first time during Thursday’s session and recorded its first close above the threshold a day later (40,003.59 on Friday). In Europe, markets are slightly up; the Stoxx 600 index rose 0.2% at 2:00 p.m. London time. Industrial stocks were up 0.8%, while insurance stocks fell 0.2%. In Asia, the Chinese market extended its 8-month highs as investors awaiteconomic data from across the region this week. China maintained its one and five-year loan rates unchanged (3.45% and 3.95%, respectively) after the country announced measures to boost its real estate market on Friday. As for commodities, oil prices are slightly downfollowing the death of Iran’s president in a helicopter crash; no changes are expected in the policy of the OPEC’s third-largest producer. U.S. crude and Brent posted moderate gains last week but remain stuck in a narrow range as investors look for a catalyst to lift prices. Metals and cryptocurrencies are logging mixed figures, and in Mexico, the IPC is up (+0.16%) and stands at 57,673 points.

Over the weekend, the exchange rate fluctuated between a low of 16.49 and a high of 16.65, currently trading at 16.62. 

Corporate News

• Nvidia shares rose 1.4% as the company prepares for its highly anticipated quarterly report later this week. Several firms raised their price targets for Nvidia, including Barclays and Stifel.

• U.S. shares of Li Auto fell 4.3%. Li reported weaker-than-expected earnings for the first quarter and provided soft guidance for current-quarter revenue.