The Day at a Glance | October 11 2024

The Top

*In Mexico, industrial production declined in September. 

*In the US, core PPI inflation continues to rise, nearing 3.0%. 

*Republican presidential candidate Donald Trump is presenting a new tax cut proposal approximately once a week in an unusual rush during the final stretch of the campaign in attempts to influence voters in an election that could be decided by just a few thousand votes. 

*The UK economy expanded in August after two consecutive months of stagnation, providing some relief to Finance Minister Rachel Reeves ahead of the first budget of the new Labour government later this month. 

*On Friday, the French government said that its 2025 budget is necessary to control its debt burden, while it faces criticism from both the right and the left for demanding unfair detriments from the French people. 

*On Friday, oil prices fell slightly but are heading for a second weekly gain as investors weighed the impact of Hurricane Milton on US demand against any widespread supply disruptions if Israel attacks Iranian oil sites.

Economic environment

In Mexico, industrial production declined in September. September´s figures logged an annual decrease of -0.9% in the country’s industrial activity, according to original data. Within this, two of the four components recorded annual expansions: water and gas generation and distribution (+2.2%) and manufacturing (0.1%), while mining and construction fell by -1.2% and -4.5%, respectively. As a result, industrial production in Mexico had an accumulated growth of 1.2% for the January – August period, according to seasonally unadjusted figures compared to the same period last year. On a monthly basis, industrial production in our country declined by -0.5% in August, according to seasonally adjusted figures. Within the sectors, manufacturing, mining, and water and gas generation and distribution increased by 0.3%, 0.1%, and 1.4% month-over-month, respectively, while construction fell by -3.7% month-over-month according to seasonally adjusted data. The figures reveal that manufacturing lost momentum, mainly due to a drop in construction, which had maintained strong momentum during the previous year. The outlook for the Mexican economy continues to point towards a slowdown.

In the US, core PPI inflation continues to rise, nearing 3.0%. The Bureau of Labor Statistics (BLS) published its Producer Price Index (PPI) inflation data for September, which showed no change on a monthly basis, below the market consensus of 0.1% month-over-month and the previous month’s 0.2% month-over-month. Meanwhile, core PPI inflation, which excludes food and energy, increased by 0.2% month-over-month in September. On an annual basis, PPI inflation stood at 1.8% (prev. 1.9%) and core PPI at 2.8% (prev. 2.6%). Once again, there was an increase in producer prices, especially in the core component, which was just 2.0% in January this year and is now approaching 3.0%. Rising producer prices could complicate the Federal Reserve’s task if the upward trend continues.

Markets and companies

US indices are logging slight gains, driven by a lower-than-expected wholesale inflation reading, which somewhat eased fears of an inflationary surge. Despite Thursday’s losses, main indices are on track for a positive weekly close, with the Nasdaq standing out with a 0.8% increase. Additionally, investors are gearing up for the start of the corporate earnings season. In Europe, markets remained slightly higher on Friday as investors assessed the UK’s GDP figures. The pan-European Stoxx 600 index rose 0.2% around 1:45 p.m. London time, with most sectors in positive territory. Mining stocks led the gains, while the telecommunications sector declined. In China, stock markets closed mostly lower. In South Korea, the Bank of Korea cut its interest rate by 25 basis points, marking the end of its monetary tightening cycle. Lastly, the Nikkei 225 closed higher, boosted by the financial and healthcare sectors.

Regarding commodities, oil prices retreated after a rebound of more than 3% on Thursday. Despite the volatility, Brent is heading for its second consecutive week of gains, driven by tensions in the Middle East. Regarding precious metals, gold rose to $2,649.75 per ounce, with investors watching for possible rate cuts from the Fed.

In fixed income, the yield on the 10-year Treasury bond rose 3 basis points to 4.10%, while the 2-year bond yield declined, standing at 3.96%.

The IPyC index is trading lower at 52,311.6 points, and the exchange rate is at 19.41 pesos per dollar, slightly below yesterday´s close (19.46).

Corporate news

*JPMorgan Chase shares rose 2% after exceeding expectations in third-quarter revenue and earnings.

*Wells Fargo gained 3%, despite reporting lower-than-expected revenue, as it surprised the market with better-than-anticipated profits.

*Tesla fell following the Cybercab event, its robotaxi concept announcement. The reveal did not meet investors’ expectations, who were hoping for more concrete advancements in autonomous driving technology.