The Day at a Glance | September 25 2024

The Top

• The Organization for Economic Cooperation and Development (OECD) released its global economic outlook report titled Turning the Corner.

• The start of the Federal Reserve’s rate cut cycle has revived concerns about inflation in the US bond market, as some investors fear that more flexible financial conditions could reignite price pressures.

• According to the ECB, wage pressures are easing across the Eurozone, likely contributing to further moderation in inflation.

• On Wednesday, French Prime Minister Michel Barnier faced calls to quickly develop realistic plans to curb a growing fiscal deficit as a rising budget crisis tests his new government.

• Megan Greene, a member of the Monetary Policy Committee, said that the Bank of England should take a cautious approach when cutting interest rates due to the risk of long-term inflationary pressures.

• Oil prices fell more than 1% on Wednesday as investors assess whether China’s latest stimulus packages will be able to boost its economy and stimulate fuel demand in the world’s largest crude importer.

Economic Environment

The Organization for Economic Cooperation and Development (OECD) released its global economic outlook report titled Turning the Corner. The OECD estimates that global GDP growth will stabilize at 3.2% for 2024 and 2025, driven by lower inflation, improved real incomes, and less restrictive monetary policy. Additionally, the latest indicators of economic activity show there´s good momentum, particularly in the services sector, while real wages are supporting household income and spending, and global trade is recovering faster than previously estimated. However, shipping costs remain high, and export orders have recently moderated. In the US, the OECD estimates 2.6% growth in 2024 and 1.6% in 2025, while in the Eurozone, growth is estimated at 0.7% in 2024 and 1.3% in 2025. Meanwhile, China’s economy is expected to grow slightly below the government’s target at 4.9% in 2024 and 4.5% in 2025. However, significant risks remain in place, as trade and geopolitical tensions persist, which could further affect investment and increase the prices of imported goods. Moreover, growth could slow more sharply as labor markets cool, and financial markets may experience bouts of volatility if inflation deviates from its disinflationary path. Regarding inflation, the organization estimates that the central bank targets of most G20 countries will be reached by the end of next year.

Markets and Companies

The Dow Jones and the S&P 500 are logging slight changes after reaching record highs yesterday. The three major US indices are heading towards a winning month, although concerns about an economic slowdown persist following the Fed’s rate cut last week. In Europe, stocks were mostly down; however, the Stoxx 600 was up 0.1% at 1:40 p.m. London time. In Asia, the People’s Bank of China cut the medium-term lending facility rate to 2% from 2.3%. Additionally, Chinese stocks led the region’s markets on Wednesday, driven by the stimulus measures announced by Beijing a day earlier. Regarding commodities, oil prices fell 1% on Wednesday as investors reassessed whether China’s latest stimulus plans would be able to boost its economy and increase fuel demand in the world’s largest crude importer. Even so, declining crude and fuel stockpiles in the US, along with rising violence in the Middle East, provided some support to the market. Gold remains steady, and cryptocurrencies are mostly down. In Mexico, the IPC dropped 0.28%, and stands at 53,505 points.

The exchange rate is at 19.43 after closing at 19.34 yesterday.

Corporate News

• KB Home shares fell 6% after its fiscal third-quarter earnings missed expectations.

• Progress Software shares rose more than 5% after exceeding expectations in its fiscal third-quarter results.