The Day at a Glance | May 22 2024

The Top

• Citibanamex’s survey estimates that annual inflation will rise in the first half of May and maintains expectations of a first rate cut in June.

• In March, construction value grew by 13.9% (previously 23.2%), according to figures from INEGI´s national survey of construction companies. 

• Inflation in the UK fell from 3.2% in March to 2.3% in April, setting above the 2.1% expected by the consensus.

• Germany’s Bundesbank warns of inflation risks after wages increased more than expected.

• The Central Bank of China is asking some commercial banks to accelerate the pace of granted loans to support the economy.

• Oil prices fall for the third consecutive day amidstexpectations that the US Federal Reserve will keep the federal funds rate elevated for longer than expected.

• Main U.S. indices are falling as Nvidia’s quarterly results approach.

Economic Environment

Citibanamex’s survey estimates that annual inflation will rise in the first half of May and maintains expectations ofa first rate cut in June. Yesterday, the Citibanamex Survey of Financial Market Analysts’ Expectations was published, in which respondents estimate that annual general inflation will increase from 4.67% in the second half of April to 4.78% in the first half of May. For the end of 2024, expectations for general and core inflation were set at 4.21% (previously 4.17%) and 4.07% (previously 4.10%), respectively. For the next 12 months (May 2025/May 2024), they forecast that annual inflation will be 3.79%. Regarding the funding rate, the consensus forecasts that it will close 2024 at 10.0%, unchanged from the previous survey. Most participants expect the next interest rate cut to occur in June (25 basis points). Regarding the exchange rate, the expectation for the end of 2024 is 17.90 pesos per dollar and 18.66 pesos per dollar for 2025. Real GDP growth for 2024 is forecasted at 2.2% and at 1.8% for 2025, also unchanged from the previous survey.

Markets and Companies

Main U.S. indices are falling as Nvidia’s quarterly results approach. Nvidia is expected to release its first-quarter results after the close, and analysts expect another strong quarter for the chipmaker. Investors will closely watch the report for clues on whether this year’s tech rally can continue; they will also focus on the most recent Fed meeting minutes and April’s existing home sales. In Europe, markets are down as UK inflation failed to meet estimates; the Stoxx 600 was down -0.46% at 1:04 p.m. London time, with most stocks in the red. The automotive sector was down-1.64% and oil stocks -1.12%. In Asia, markets closed mixed; Japan’s Nikkei ended with a -0.85% drop, while China’s CSI rose 0.23%. Regarding commodities, oil is falling for the third consecutive day amidst expectations that the Fed might keep U.S. interest rates high for a longer period. Metals and cryptocurrencies are down, and in Mexico, the IPC is down (-0.22%) standing at 56,635 points.

After yesterday’s trading session, the exchange rate fluctuated between a low of 16.59 and a high of 16.68, currently trading at 16.66.

Corporate News

• Target’s shares fell more than 7% after posting results that fell short of estimates. Sales dropped by around 3%.

• Shares of Analog Devices, a semiconductor manufacturing company, rose 6.2% after surpassing first-quarter estimates.

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