The Day at a Glance | September 23 2024

The Top

• Mexico´s economy rebounded in July. 

• Retail sales in Mexico increased in July.

• Eurozone PMI´s show that economic activity declined for the first time in seven months. The manufacturing PMI set at 44.8 (previously 45.8), while the services PMI set at 50.5 (previously 52.9).

• US PMI´s continue to show mixed figures. The manufacturing PMI was 47.0 (previously 47.9), while the services PMI stood at 55.4 (previously 55.7).

• China’s Central Bank injected liquidity into its banking system for the first time in months at a lower interest rate, indicating its intention to further ease monetary conditions.

• According to Reuters, US Vice President Kamala Harris plans to present a set of economic proposals this week aimed at helping Americans build wealth and establish economic incentives for businesses.

• Oil prices remained virtually unchanged on Monday after last week’s US interest rate cut and a drop in US crude supply following Hurricane Francine offset weaker oil demand from China.

Economic Environment

Mexico´s economy rebounded in July. In Mexico, the Global Indicator of Economic Activity (IGAE for its acronym in Spanish), a proxy for monthly GDP, increased by 0.6% m/m in July, after rising 0.2% m/m in June and 0.8% in May, according to seasonally adjusted figures. In detail, the primary sector grew by 11.6% m/m, the secondary sector increased by 0.2% m/m, and the tertiary sector rose by 0.4% m/m. In its annual change, according to original figures, the IGAE grew by 3.8% in July 2024. By sectors, primary activities surged by 16.7%, secondary by 2.1%, and tertiary by 4.3%. From January to July 2024, the economy recorded a 2.1% growth rate compared to the same period last year. Overall, IGAE figures rebounded due to an unusual increase in the primary component, which is the most volatile one, so it will be important to monitor whether this indicator reverses the increase in the coming months. For now, we maintain our growth estimate of 1.3% for the entirety of 2024.

Retail sales in Mexico increased in July. INEGI reported that retail sales grew by 0.7% m/m in July, after falling by -0.5% m/m in June and stagnating in May, according to seasonally adjusted figures. Annually, according to original figures, sales declined by -0.6% in July, setting slightly below market expectations that forecasted a -0.5% drop. Within the annual figures, the increase in sales through the internet and printed catalogs (33.0%) stands out, while self-service and department store sales show a contraction of -6.2%, and grocery, food, and beverage sales grew by 5.5%. Thus, retail sales reported a partial recovery in consumption in the country in July; however, we will closely monitor upcoming figures before adjusting our growth estimates. 

Markets and Companies

The Dow Jones is posting slight changes after last week’s enthusiasm over the interest rate cut pushed the index to a record closing level. This occurs after a winning week forWall Street, which focused on the Federal Reserve’s decision to cut interest rates by 50 basis points, its first cut in four years. Despite some volatility following the initial announcement, stocks rebounded in the days that followed. In Europe, stocks edged slightly higher as investors assessed banking deals and business activity data in Germany and France, pointing to further declines in the region’s two largest economies. The Stoxx 600 rose 0.24% at 1:24 p.m. London time, with most sectors in the green. Similarly, Asia-Pacific markets mostly rose on Monday as investors digested monetary policy decisions from Japan and China, as well as last week’s sharp rate cut by the US Federal Reserve. In commodities, oil edged higher as the US interest rate cut offset weak demand. Metals and cryptocurrencies are logging mixed figures. In Mexico, the IPC index is up 0.14% and stands at 52,261 points.

Over the weekend, the exchange rate fluctuated between a low of 19.33 and a high of 19.50, currently trading at 19.37.

Corporate News

• Intel shares rose 4% after news that asset management firm Apollo Global Management offered to invest up to $5 billion in Intel, according to a Bloomberg News report on Sunday.

• Shares of networking software manufacturer Cienajumped more than 4% after Citigroup upgraded the stock from sell to buy, citing a more favorable outlook in the telecom/cable industry. The bank foresees a growth in bookings toward next year.