The Day at a Glance | September 13 2024

The Top

• Eurozone industrial production continued to decline in July, suggesting weakness for 3Q24 economic growth.

• On September 27^th, the Joe Biden administration will enforce tariffs on Chinese imports, highlighting a 100% tariff on electric vehicles, 50% on solar panels, and 25% on steel and aluminum, electric vehicle batteries, and minerals.

• According to Bloomberg, Beijing could cut interest rates on existing mortgage loans by around 80 basis points as early as September, in an attempt to boost consumer confidence and revive the real estate sector.

• An interest rate cut by the Bank of England next week seems unlikely, but investors will closely watch its September meeting for hints about future measures, as well as a decision regarding the pace of its bond sales.

• The Bank of Japan is expected to keep its monetary policy unchanged next week but signals upcoming interest rate hikes and highlights the economy’s progress in sustaining inflation around its 2% target.

• Oil prices rose about 1% on Friday, extending their rally and putting crude oil on track for a weekly gain due to the disruption of US production after Hurricane Francine forced the evacuation of production platforms in the Gulf of Mexico.

Economic Environment

Eurozone industrial production continued to decline in July, suggesting weakness for 3Q24 economic growth. Eurozone industrial production fell by -0.3% m/m in July 2024, after stagnating in June and dropping by -0.9% in May. July’s figures set above the consensus forecast, which expected a deeper (-0.5% m/m) decline. This negative performance is mainly due to a -2.8% m/m drop in the durable consumer goods component, as well as declines in capital goods (-1.6% m/m) and intermediate goods (-1.3% m/m). On the other hand, energy production increased by 0.3% m/m, and non-durable consumer goods increased by 1.8% m/m. Annually, Eurozone industrial production fell by -2.2%, driven by contractions in 3 of its 5 components. Notably, the largest decline was seen in capital goods production (-5.3%), followed by durable consumer goods (-4.4%) and intermediate goods (-2.9%). Additionally, the European block´s main economies also logged annual declines, such as Germany (-5.5% vs. -3.8% prior), Spain (-0.9% vs. 0.6% prior), France (-2.3% vs. -1.6% prior), and Italy (-3.3% vs. -2.6% prior). Overall, Eurozone industrial production figures continue to show a clear downward trendamidst global weakness in manufacturing. Without a doubt, these figures suggest weakness for economic growth in the third quarter of the year.

Markets and Companies

US markets are trading higher, with the S&P 500 heading toward its fifth consecutive positive session. Attention is focused on the upcoming Federal Reserve meeting, scheduled for September 17-18, in which a 25-basis-point rate cut is expected, backed by economic data showing a moderation in inflation. In Europe, the automotive and retail sectors are in positive territory, while travel and leisure are recording losses. However, overall, the region’s main indices are reporting gains, driven by the European Central Bank’s monetary policy decision yesterday. In Asia-Pacific, markets are down after the release of India’s annual inflation data, which exceeded expectations (3.65% vs. the 3.50% expected). The Japanese yen briefly reached its strongest intraday level since December 2023 against the dollar, while Chinese markets hit their lowest point since 2019.

Regarding commodities, crude oil prices are performing positively after the International Energy Agency (IEA) reduced its oil demand growth forecasts due to economic problems in China. Precious metals, on the other hand, are logging positive figures, and are being driven by high expectations of rate cuts by the Fed.

The US Treasury yields stand at 3.65% for the 10-year bond, while the 2-year bond yields 3.57%.

The IPC index is up and stands at 52,072.9 points.

The exchange rate is at 19.36, after closing at 19.53 yesterday. 

The National Association of Supermarkets and Department Stores (ANTAD for its acronym in Spanish) reported sales results for August. Same-store sales (SSS), which include stores with more than one year of operation, logged a nominal increase of +5.4%. As for total store sales, which include both existing and newly opened stores in the last 12 months, growth was +8.4% compared to the same period last year.

Corporate News

• Boeing is facing a massive labor strike after more than 300,000 workers rejected a new labor contract, affecting the production of planes like the 737 Max.

• Technology company Oracle raised its revenue forecast for the 2026 fiscal year, providing strong guidance through 2029, which boosted its stock.

• Despite beating third-quarter estimates, software company Adobe announced weaker-than-expected guidance for the rest of the year. Its shares dropped.