The Day at a Glance | September 5 2024

The Top

• Retail sales in the Eurozone remain weak.

• The Bank of Canada cut its interest rate by 25 basis points to 4.25%, signaling that another cut could be made if inflationary pressures continue to ease.

• According to a Reuters survey, the ECB will cut interest rates by 25 basis points in its next meeting on September 12^th and again in December.

• Later today, the ISM services index for August will be released, with consensus estimating a 51.4 point figure.

• In the week ending August 24^th, initial unemployment insurance claims in the US stood at 227,000, logging a decrease of 5,000 from the previous week’s 232,000.

• Oil prices recovered on Thursday, moving away from multi-month lows due to a possible delay in production increases by OPEC+ producers and a drop in US inventories.

Economic Environment

Retail sales in the Eurozone remain weak. In July, retail sales decreased by -0.1% year-over-year, following a -0.4% year-over-year decline in June. This marks two consecutive months of annual declines. Within retail sales, food sales dropped by -0.7% year-over-year, while non-food product stores increased by 0.2% year-over-year, and gas stations stagnated. Among the major economies in the European block, sales in France fell by -0.3% year-over-year (prev. 0.0%), while in Spain, they grew by 1.2% year-over-year (prev. 0.4%). On a monthly basis, retail sales posted a slight increase of 0.1% in July, after a -0.4% decline was loggedthe previous month. Overall, the data indicates that consumption in the Eurozone started the third quarter with a weak tone, aligning with the expectation that the European Central Bank will cut interest rates again next week.

Markets and Companies

US markets are having a mixed reaction to the release of mixed economic data. The S&P 500 and Dow Jones opened with negative figures, while the Nasdaq saw a slight rebound for the week. Recent market volatility, driven by economic concerns, continues to highlight labor data, with weak private-sector job growth despite a drop in unemployment insurance claims. With this context, European markets fell on Thursday, with the Stoxx 600 index down 0.23% at 2 p.m. London time, with sectors split between losses and gains. Utility stocks rose by 1.97%, while the tech sector fell by 1.17%. This marked the fourth consecutive day of declines for the Stoxx 600 after surpassing 525 points for the first time on Friday. In Asia, markets closed mixed, with the Nikkei leading losses after real wages increased for the second consecutive month in July.

In the commodities market, there were slight positive changes. Oil prices stand at USD $69 per barrel, nearing their lowest levels in nine months. Meanwhile, concerns over increased supply combined with weaker demand are rising due to plans by OPEC+ to boost production. Meanwhile, gold is trading below its closing price of USD $2,526.

The 10-year bond yield stands at a rate of 3.73%, while the 2-year bond yield is also at 3.73%.

Meanwhile, in Mexico, the IPC opened higher at 51,843.4 points.

After closing at 19.93, the exchange rate is now at 20.03.

Cemex announced the sale of its stake in Neoris N.V. for USD $209 million. On Wednesday, the cement company agreed to sell its approximately 34.8% stake in Neoris, with the transaction expected to close before the end of 2024. 

Grupo Aeroportuario del Pacífico reported its passenger traffic for August. The company reported a 7.2% decrease compared to the same month last year. In August, 10 of the 12 airports operated by GAP reported a decline in total passenger traffic, with Mexicali experiencing the largest drop (-43.9%).

Corporate News

• Verizon announced the acquisition of Frontier Communication. It is an all-cash transaction valuing the target company at $20 billion, with the deal expected to close within the next 18 months.

• Dollar Tree shares continue to fall at the open after the company lowered its full-year forecasts. Investment bank JP Morgan downgraded its rating to neutral.

• Electric vehicle company Tesla announced that it will launch its “Full Self Driving” program in Europe and China in the first quarter of next year, generating positive expectations for the company.

• New York-based airline JetBlue Airways improved its revenue forecast for the third quarter, revising a 2.5% loss to a 1% gain.