The Day at a Glance | October 21 2024

The Top

• The Timely Indicator of Economic Activity (IOAE) suggests that the economy could grow by about 1.0% in the third quarter. 

• IMF and World Bank leaders will meet in Washington this week amidst intense uncertainty over geopolitical conflicts, a weakened Chinese economy, and concerns that the US presidential election could trigger new trade wars. 

• China cut its one and five-year interest rates on Monday, in line with market expectations, following cuts to other policy rates last month as part of a stimulus package in efforts to revive the economy. 

• Producer inflation in Germany fell more than expected in September, decreasing by -1.4% year-on-year, mainly due to significantly lower energy prices, according to the federal statistics office. 

• US Secretary of State Antony Blinken will try toreach a ceasefire when he heads to the Middle East on Monday, according to the State Department, seeking to push for negotiations to end the Gaza war and defuse the conflict in Lebanon. 

• Oil prices rose on Monday, recovering some of last week’s more than 7% drop due to concerns about demand in China and reduced fears about possible supply disruptions in the Middle East.

Economic Environment

The Timely Indicator of Economic Activity (IOAE) suggests that the economy could grow by about 1.0% in the third quarter. The IOAE, a Nowcasting indicator of the IGAE, estimates that Mexico´s economy grew by 1.2% year-on-year in August and 0.5% year-on-year in September, according to seasonally adjusted figures. By components, industrial production, which includes construction, manufacturing, electricity generation, and mining, declined by -0.3% year-on-year in August, and the IOAE estimates it could drop by -0.5% year-on-year in September. Regardingservices, the IOAE estimates 2.2% year-on-year growth in August, moderating to a 0.9% year-on-year increase in September. This would translate into a -0.3% month-on-month decrease in August and a -0.1% month-on-month drop in September, according to seasonally adjusted figures. Thus, if we incorporate the IOAE´s growth figures into the IGAE, we can expect the economy to grow by 1.2% in the third quarter of 2024 compared to the third quarter of 2023, a considerably low figure that continues to point to aneconomic slowdown. Tomorrow, INEGI will release August´s IGAE. 

Markets and Companies

Main US indices are down slightly at the beginning of the week. Stocks are down after the S&P 500 and Dow Jones reached all-time highs on Friday, linking a sixth consecutive week of gains. The S&P 500 ended the week with a 0.85% increase, while the Dow was up 0.96%. The Nasdaq rose 0.80%. Similarly, European markets were down today as investors awaited significant corporate earnings results and kept an eye on tensions in the Middle East. The Stoxx 600 was down about 0.44% at 1:50 p.m. London time, with almost all sectors in the red. Meanwhile, Asia-Pacific markets were mixed as investors assessed China’s loan prime rate announcement, with markets also focusing on Japan’s general elections later this week. As for commodities, US crude oil rose more than 2% after last week’s 8% drop. Metals are up and cryptocurrencies are down. In Mexico, the IPC is up 0.14% and stands at 53,100points.

Over the weekend, the exchange rate fluctuated between a low of 19.84 and a high of 20.06. It´s currently trading at 20.04.

Corporate News

• Kenvue shares rose more than 8% after activist investor Starboard Value acquired a significant stake in the Johnson & Johnson spinoff. People familiar with the matter said the activist is looking for Kenvue to lift its share price.

• Boeing shares rose 3.3% after the aircraft manufacturer and its machinists’ union reached a new contract proposal that could end a month-long strike. The ratification vote on the proposal, which includes a 35% wage increase, is expected to take place on Wednesday.