The Day at a Glance | September 9 2024

The Top

• In Mexico, August’s general inflation surprised to the downside due to an extraordinary drop in agricultural products.
• China’s consumer inflation stood at 0.6% year-over-year in August, below the consensus expectation of 0.7% and above July’s 0.5%. The rebound was due to higher food costs caused by weather disruptions. Producer inflation was -1.8% year-over-year in August, below the consensus forecast of -1.5%.
• Mexico’s producer inflation (INPP excluding oil) stood at 5.0% year-over-year in August, down from 5.3% a month earlier.
• Japan’s economy grew at a slightly slower pace than initially reported in the second quarter. The revision is due to downward adjustments in corporate and household spending.
• Oil futures rose nearly 1% on Monday due to a potential hurricane approaching the US Gulf Coast.

Economic Environment

In Mexico, August’s general inflation surprised to the downside due to an extraordinary drop in agricultural products. INEGI reported that the National Consumer Price Index for August recorded a monthly 0.01% change, below both our estimate and the consensus forecast at 0.12% and 0.07%, respectively. On an annual basis, general inflation set at 4.99% in August. The generic items with the highest monthly increases were lime (18.2%), pineapple (14.2%), and grapes (9.5%), while those with the most considerable declines were chayote (-61.1%), green beans (-20.8%), and serrano peppers (-17.4%). Meanwhile, core inflation, which excludes the most volatile items like energy and agricultural products, as well as government tariffs, increased by 0.22% month-over-month in August, in line with our estimate (0.22%) and the consensus forecast (0.23%). Annually, core inflation was 4.00% in August. By components, goods rose by 0.18% month-over-month and 3.02% year-over-year, while services increased by 0.27% month-over-month and 5.18% year-over-year. On the other hand, non-core inflation decreased by -0.70% month-over-month and stood at 8.03% year-over-year. Lastly, the second half of August logged a -0.06% biweekly figure. Overall, August’s figures indicate that inflation declined due to a drop in the most volatile components, while the core component, which is related to medium and long-term inflation, stood at 4.0%. It will be important to see how much further this component decreases in order to achieve convergence with the Central Bank of Mexico’s 3.0% inflation target.

Markets and Companies

Main indices in the US are up as the market recovers from its worst week of the year. Indices suffered significant losses as they began the first trading week of September, a historically tough month for stocks. The S&P 500 fell -4.3%, recording its worst week since March 2023. The Nasdaq dropped -5.8%, marking its worst week since 2022, while the Dow Jones declined -2.9%. In Europe, stocks are also posting positive returns. The Stoxx 600 was up 0.66% at 1:58 p.m. London time, with the majority of sectors in the green. Travel and leisure stocks led gains, rising 1.81%, while banks were also up 1.26%. In Asia, markets are down, with Hong Kong’s Hang Seng leading regional losses. Japan’s GDP for the second quarter came in at 2.9%, below expectations, while inflation in China increased 0.6% year-over-year, also setting below expectations. Regarding commodities, US crude oil rebounded nearly 1% on Monday after posting its worst week since October 2023. The WTI benchmark has dropped 15.8% in the third quarter; the Brent benchmark has dropped 16.6%. Metals are up, and in Mexico, the IPC is up +0.13% and stands at 51,151 points.

Over the weekend, the exchange rate fluctuated between a low of 19.82 and a high of 20.07, currently trading at 19.84.

Corporate News

• Boeing shares rose 4% after the aircraft manufacturer reached an agreement with a union representing its factory workers, potentially avoiding a costly strike.
• MarineMax shares jumped 6% after Citi upgraded its rating from neutral to buy. The firm highlighted the advantages of a lower-rate environment and limited downside risks.