The Day at a Glance | October 10 2024

The Top

• In the US, CPI inflation stood at 2.4% in September. 

• Today, The Central Bank of Mexico´s meeting minutes will be released – corresponding to the announcement made on September 26^th, when the funding rate was cut by 25 basis points. 

• On Thursday, China’s central bank announced that it would start accepting applications from financial institutions to join a newly created financing plan, initially valued at 500 billion Yuan ($70.62 billion), to boost the capital market.

• On Thursday, the Bank of Japan’s Deputy Governor, Ryozo Himino, said that the central bank would consider raising interest rates if the board becomes more confident that its economic and price forecasts will be met.

• Hurricane Milton swept through Florida on Thursday, causing tornadoes, destroying homes, and leaving millions without power, although it did not result in the feared flooding that had been predicted before it moved into the Atlantic.

• Oil prices rose by more than 1% on Thursday, boosted by increased fuel demand in the US, with supply risks in the Middle East also in focus.

Economic Environment

In the US, CPI inflation stood at 2.4% in September. The Bureau of Labor Statistics (BLS) released its Consumer Price Index (CPI) inflation figures for September, which logged a 0.2% m/m increase, according to seasonally adjusted data. Nearly all the monthly increase came from rises in the housing (0.2% m/m) and food (0.4% m/m) components, according to the BLS. On an annual basis, CPI inflation reached 2.4% in September (previously 2.5%), in line with our forecast and slightly above the market expectation of 2.3%, based on original data. Core inflation, which excludes energy and food, recorded a monthly 0.3% m/m increase in September. Annually, core inflation accelerated to 3.3% from August to September (3.2% prev.). The CPI inflation figures indicate that inflation continues to decline, although core inflation remains high and above three percent. Nonetheless, the data is well-received as it represents the smallest increase in more than three and a half years, maintaining expectations that the US Federal Reserve will continue its rate-cutting cycle next month.

Markets and Companies

The US stock market is slightly down this morning as investors digest September´s Consumer Price Index (CPI) data, which showed a 0.2% monthly increase and a 2.4% annual rise, surpassing analysts’ expectations. This data keeps the debate on the Federal Reserve’s next moves alive, with a higher likelihood of a 25-basis-point rate cut in its November meeting. In Europe, markets are down, with the pan-European Stoxx 600 index falling 0.14%. Investors are focused on US inflation data to assess whether inflationary pressures continue to ease. Insurance sector stocks are rising following Hurricane Milton’s impact in Florida, while miners are declining.

Lastly, in Asia, markets closed higher, following Wall Street’s optimism. In China, the CSI 300 rose 1.06%, while Hong Kong’s Hang Seng increased by 3%, driven by support from its central bank for the markets.

In the commodities market, oil prices are up more than 1% due to increased fuel demand caused by Hurricane Milton in Florida, as well as supply risks in the Middle East. The week began with rising prices following Iran’s attacks on Israel, but the lack of an immediate response from Israel has helped stabilize prices.

Regarding metals, gold is rebounding, driven by expectations of Federal Reserve rate cuts, despite the strong dollar and rising Treasury yields.

US Treasury yields remain stable, with the 10-year bond at 4.07% and the 2-year bond at 3.96%.

The local stock market opened lower, with the IPC trading at 51,741.7 points. Meanwhile, the exchange rate stands at 19.58, after closing at 19.49 yesterday. 

Walmex announced the construction of a distribution center in Guanajuato. Walmex began the construction of its 34^th distribution center in Silao, Guanajuato, with an investment of over $500 million dollars. This facility will create more than a thousand direct jobs and supply over 600 stores and clubs across various states in central and western Mexico.

Femsa announced an agreement with Traxión. FEMSA announced an agreement with Grupo Traxión to sell part of its Solistica logistics operations, including logistics in Mexico, Brazil, and Colombia, for approximately 4.06 billion pesos. This sale is part of the FEMSA Forward plan and is subject to regulatory approvals, with the transaction expected to close in the coming months.

Corporate News

• Shares of Delta Air Lines fell nearly 5% after the airline provided disappointing revenue guidance for the fourth quarter.

• Biotechnology company 10x Genomics announced a 1% year-over-year decline in its revenue, stating that changes in its business processes and organization were more disruptive than anticipated.

• Tesla shares rose more than 1% ahead of its robotaxievent, with expectations that the company will unveil a prototype of the “Cybercab,” along with other announcements related to driver assistance and AI capabilities.