The Day at a Glance | November 15 2024

The Top

• In China, economic indicators pointed to some weakness despite a rebound in consumption.
• In the US, retail sales rose more than expected in October.
• Yesterday, Moody’s Ratings reaffirmed the sovereign credit rating at Baa2 but revised the outlook from stable to negative.
• Later today, the Ministry of Finance will send the 2025 economic package to Congress.
• Germany’s economy is expected to grow slower than the Eurozone´s average through 2026, according to forecasts released by the European Commission on Friday.
• On Monday, Bank of Japan Governor Kazuo Ueda will deliver a speech and hold a press conference in Nagoya at an event closely watched by markets for hints on whether interest rates might rise next month.
• Oil prices remained steady on Friday, heading for a weekly loss as investors weighed weak Chinese demand and a potential slowdown in the US Federal Reserve’s rate-cutting cycle.

Economic Environment

In China, economic indicators pointed to some weakness despite a rebound in consumption. Industrial production increased by 5.3% y/y in October 2024, slightly below the consensus forecast of 5.5% y/y and the 5.4% y/y logged in September. Manufacturing expanded by 5.4% y/y, with notable growth in computing and technology at +10.5%. On the other hand, retail sales increased by 4.8% y/y, surpassing the market expectation of 3.8% and the 3.2% reading in September. Meanwhile, fixed asset investment, excluding rural assets, rose 3.4% y/y from January to October, slightly below the consensus forecast of 3.5%. Within investment, residential construction plummeted by -10.3%. October’s figures revealed a slowdown in industrial activity growth, suggesting it’s still too early to see a turnaround in the real estate sector, even as consumption rebounded. These dynamics maintain calls for Beijing to complement its recent stimulus packages to revitalize the economy.

In the US, retail sales rose more than expected in October. Monthly retail sales increased by 0.4% m/m in October, exceeding expectations of a 0.3% m/m rise, though below the prior month’s 0.8% growth. Excluding more volatile components like autos and gasoline, retail sales increased by +0.1% m/m in October, following a 0.7% m/m increase in September. On an annual basis, retail sales rose 2.8%, while sales excluding autos and gasoline increased by 3.8%. The breakdown showed annual growth of +7.0% in online sales, +4.3% in bars and restaurants, and +4.0% in general merchandise stores. Meanwhile, sporting goods and electronics fell by -3.4% and -2.3%, respectively. Overall, retail sales data indicated that consumer spending began the fourth quarter of 2024 on a strong note, suggesting that the economy could maintain its momentum in the final months of 2024.

Markets and Companies

Futures of main US indices were trading lower this morning, contrasting with last week’s post-election rally. Uncertainty persists following comments from Federal Reserve Chair Jerome Powell, who reiterated that the Fed is in no hurry to lower interest rates. European indices are in negative territory, with the technology sector leading declines, while mining and energy sectors posted gains. In the UK, third-quarter GDP grew by 0.1% quarter-over-quarter, below expectations. In Asia, markets closed mixed after Japan reported 0.3% annual GDP growth, while China’s October retail sales data exceeded expectations with a 4.8% y/y increase.

In commodities, oil prices are down due to concerns over excess supply. Forecasts of lower global demand in 2025 continue to pressure prices downward. Gold, affected by the strength of the dollar, is rebounding but is on track for a week of declines. Other precious metals, such as silver and platinum, are also showing slight increases.

In fixed income, the yield on the 10-year Treasury rose to 4.44%, while the 2-year yield reached 4.34%. Both indicate moderated expectations for Fed rate cuts following comments highlighting the US economy´s strong growth.

In the local equity market, IPyC futures are trading higher at 50,811.0 points. Meanwhile, the exchange rate stands at 20.39 pesos per dollar, after closing at 20.45 yesterday.

Corporate News

• Shares of pharmaceutical companies like Moderna, Novavax, and Pfizer declined after President-elect Donald Trump appointed Robert F. Kennedy Jr. as Secretary of Health, given his anti-vaccine stance.
• Alibaba reported a 58% year-over-year increase in net income, driven by the performance of its equity investments, though sales missed expectations.
• Berkshire Hathaway (BRK) disclosed new investments in Domino’s Pizza and Pool Corp during the third quarter, while reducing its stakes in Apple and Bank of America. At the end of the quarter, BRK held $325.2 billion in cash.