The Day at a Glance | October 7 2024

The Top

• Eurozone retail sales recovered in August. 

• US Republican presidential candidate Donald Trump said on Sunday that he would impose tariffs of up to 200% on vehicles imported from Mexico, as he intensifies his protectionist trade rhetoric ahead of the November 5^th election. 

• The head of the French Central Bank, Francois Villeroy de Galhau, said that the ECB will likely cut interest rates on October 17^th due to weak economic growth, which increases the risk of inflation being too low and not reaching its 2% target. 

• Germany’s industrial orders fell significantly more than expected in August, adding to signs that manufacturing in Europe’s largest economy will not recover in the coming months. 

• The Bank of Japan said that rising wages are supporting consumption and pushing more companies in regional areas to pass on rising labor costs, indicating that the economy is moving towards meeting the prerequisite for further interest rate hikes. 

• Oil prices extended their gains on Monday, with Brent approaching $80, driven by fears of a wider conflict in the Middle East and a possible disruption in exports from the major oil-producing region.

Economic Environment

Eurozone retail sales recovered in August. In August, retail sales rose by 0.8% year-on-year (1.0% expected), after having decreased by -0.1% year-on-year in July. This breaks a two month streak of annual declines. Within retail sales, food sales decreased by -0.2% year-on-year (-0.8% previous), while non-food product stores increased by 1.4% year-on-year (0.3% previous) and gas stations by 2.5% (-0.7% previous). Among the European block´s major economies, sales in France increased by 0.5% year-on-year (previous -0.4%), in Spain they rose by 0.4% year-on-year (previous 0.6%), and in Italy they stagnated (0.1% previous). It´s worth noting that the release of German data was delayed due to a change in data requirements. On a monthly basis, retail sales logged a slight increase (0.2%) in August, in line with consensus expectations, after stagnating in the previous month. Overall, the European block´s figurescontinue to record a moderate recovery, as annual growth remains below 1.0%. Looking ahead, it´s possible that with rate cuts, consumption may recover to some extent.

Markets and Companies

Main US indices are trending lower. US Treasury yields are also increasing. The 10-year Treasury yield rose nearly 3 basis points, reaching 4.008%. This marks the first time since August that the yield has exceeded 4%. Higher oil prices also played a role, as tensions in the Middle East remain high. US crude climbed more than 2% to surpass $76 per barrel. In Europe, the Stoxx 600 opened 0.56% higher on Monday, though it later pared its gains. Banks and consumer goods are the only sectors in positive territory, up 0.2% and 0.4%, respectively. Asia-Pacific markets mostly increasedtoday, led by Japan’s Nikkei 225, which rose almost 2% as investors prepared for a week of central bank decisions in the region. Metals are down, and cryptocurrencies are up. In Mexico, the IPC is up 0.08%, reaching 52,653 points.

Over the weekend, the exchange rate fluctuated between a low of 19.14 and a high of 19.40; it is currently at 19.34.

Corporate News

• Apple shares fell 1.4% after Jefferies downgraded the tech company’s rating from “buy” to “hold,” stating that short-term expectations for the iPhone 16 and 17 are too high following weaker-than-expected initial demand.

• Amazon shares dropped nearly 2% after Wells Fargo downgraded the e-commerce company’s rating from “overweight” to “equal weight,” citing slowing growth and competition from Walmart.