Wall Street Slips on First Trading Day of the Year

Posted on January 2, 2025 by Ignacio Teson

The three major U.S. stock indices closed the first session of 2025 with losses, reversing earlier gains but finishing above intraday lows.

The S&P 500 fell 0.22% to 5,868.55 points, while the Nasdaq Composite declined 0.16% to 19,280.79 points. The Dow Jones Industrial Average dropped 0.36% to close at 42,392.27 points.

[[SPX-graph]]

Tesla Led the Losses

Tesla shares led the declines, plummeting 6.08% and hitting a three-week low after the automaker announced its first annual drop in deliveries. The company fell short of CEO Elon Musk’s pledge of modest growth for 2024.

Tesla reported delivering 495,570 electric vehicles in Q4 2024, below analysts’ expectations of 512,277 units. For the full year, Tesla’s total deliveries reached 1.789 million units, marking a 1.1% decrease compared to 2023 and falling short of the 1.806 million projected by analysts.

Market Outlook

Investor sentiment was further dampened by uncertainties surrounding policies introduced by former President Trump. Concerns about the long-term impact of these policies, including elevated inflation, have made investors more cautious in recent weeks. This has led to profit-taking after an initial rally in response to Trump’s electoral victory in early November.

Additionally, fears of persistently high inflation have tempered expectations of aggressive interest rate cuts by the Federal Reserve. The central bank recently signaled a slower pace of rate reductions for 2025, citing concerns about stubborn inflation and a robust labor market.

Mexican Peso Gains 26 Cents on 2025’s First Trading Day

Posted on January 2, 2025 by Ignacio Teson

The Mexican peso ended the first session of 2025 with a significant gain against the U.S. dollar, breaking a four-day losing streak.

According to data from the Bank of Mexico (Banxico), the peso closed at 20.6185 pesos per dollar, marking an appreciation of 1.27% or 26.4 centavos. This represents the peso’s strongest advance since December 20, when it appreciated by 1.30%.

The exchange rate fluctuated between a high of 20.7590 and a low of 20.5800 during the session, as reported by Banxico.

Emerging Market Currencies

Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 1.06% to 109.28 points. Despite this, the peso stood out among the day’s top-performing currencies.

The Russian ruble led gains with a 2.31% appreciation, followed by the Mexican peso (+1.27%), Brazilian real (+1.21%), Colombian peso (+0.59%), South Korean won (+0.22%), and Australian dollar (+0.19%).

Mexican Peso Performance

By ending its losing streak, the peso partially recovered the 3.40% depreciation accumulated over the previous four sessions. It now ranks as the second-best-performing currency among emerging markets in terms of gains against the dollar.

The peso’s performance was buoyed by stable trading volumes, even as the U.S. dollar advanced. However, caution remains regarding potential economic risks tied to policies introduced by Donald Trump and their impact on the Mexican economy.

Argentine ADRs Surge Up to 10% in Session of 2025

Posted on January 2, 2025 by Ignacio Teson

Argentine stocks rallied sharply in the first trading session of 2025 following a wave of profit-taking at the end of 2024.

On Wall Street, Argentine ADRs climbed as much as 10%, while the S&P Merval index in dollars surged over 6%, nearing an all-time high.

Investors are focusing on the consolidation of an orthodox economic program led by President Javier Milei. Encouraging signs such as fiscal balance, declining inflation, and the anticipation of an agreement with the International Monetary Fund (IMF) that could unlock new funding have bolstered market confidence.

Notable gainers among Argentine ADRs include BBVA (+11.2%), Transportadora de Gas del Sur (+11.1%), and Bioceres (+10.9%). The optimism extends beyond fiscal and monetary improvements, with hopes pinned on securing IMF funds to lift currency controls, sustain disinflation efforts, and attract private investment, all aiming to drive a robust economic recovery.

Argentinian Bonds and Currency

Dollar-denominated bonds also saw gains, with the Bonar 2029 up 1.3%, the Bonar 2030 rising 0.9%, and the Global 2041 adding 0.9%.

In this context, Argentina’s country risk, measured by J.P. Morgan, remained steady at 635 basis points.

The Central Bank of Argentina (BCRA) has outlined plans for 2025 to achieve a more flexible exchange rate regime, fostering currency competition while implementing a moderated monthly depreciation aligned with reduced inflation levels. In December, the BCRA purchased $904 million from the market, further strengthening its reserves.

Tesla Plunges 7% After Worst Sales Figures in a Decade

Posted on January 2, 2025 by Ignacio Teson

Tesla’s stock tumbled on Thursday following news that the company’s annual vehicle sales declined for the first time in over a decade, despite a record-setting fourth quarter.

Tesla reported selling 1.79 million vehicles in 2024, falling slightly below 2023’s total and missing analysts’ expectations. This has prompted investors to reassess their positions.

Tesla’s shares dropped 4.5%, trading at $385.72. While the stock had surged 63% over the year, the final quarter saw deliveries of 495,570 vehicles, short of the 512,277 projected by analysts. To achieve its goal of modest annual growth, Tesla would have needed to deliver nearly 515,000 vehicles in Q4.

[[TSLA/USD-graph]]

This sales dip comes amidst subdued consumer demand for electric vehicles (EVs), a challenge exacerbated by former President Trump’s efforts to reduce incentives for EV buyers.

Challenges in 2024

Tesla faced several setbacks last year, including a fire at its Berlin factory, shipping delays, and a slowdown in EV sales across the industry. The company noted that demand for its fully electric vehicles is caught between two significant growth waves.

In April, Tesla reduced its workforce by over 10%, including sales staff. Despite these cuts, the automaker expressed confidence in October about achieving modest delivery growth for the full year.

Outlook for 2025

Looking ahead, Elon Musk told investors during Tesla’s latest earnings call that the company anticipates 20%-30% growth in 2025. This projection is partly fueled by plans to launch a more affordable vehicle in the first half of the year and advancements in the company’s autonomous driving technology.

Details on the new vehicle, including its design and pricing, remain sparse, leaving investors eager for further announcements.

The “Super Dollar” Starts the Year Cautiously

Posted on January 2, 2025 by Ignacio Teson

The market’s attention at the start of the year is squarely on the incoming administration of Donald Trump.

His policies are expected not only to drive growth but also to intensify inflationary pressures, supporting U.S. Treasury yields and fueling demand for the dollar.

On Thursday, the first trading day of 2025, the dollar wavered slightly. After a strong performance in 2024, the U.S. currency is expected to remain robust this year.

Interest Rate Differentials Drive Dollar Strength

The wide interest rate gap between the United States and other economies dominated currency markets in 2024, causing most currencies to weaken significantly against the dollar. The Japanese yen, in particular, saw a sharp decline of over 10%, marking its fourth consecutive year of losses. On Thursday, however, the yen showed some strength as the dollar dipped 0.25% to 156.6 yen. This follows a late-December peak of over 158 yen, a five-month high.

Euro and British Pound Under Pressure

The euro briefly gained earlier in the week but flattened at $1.0351, down from September highs of $1.12. Markets expect the European Central Bank to cut rates further in 2025, with forecasts of 113 basis points in easing compared to 42 basis points anticipated from the U.S. Federal Reserve.

[[EUR/USD-graph]]

The British pound slipped 0.2% to $1.250, following a 1.7% decline in 2024. Despite this, it remained the best-performing G10 currency against the dollar, bolstered by better-than-expected economic resilience in the UK and persistent services inflation that prompted a more aggressive stance from the Bank of England compared to other central banks.

Chinese Yuan Hits New Lows

The Chinese yuan languished at 14-month lows as concerns about China’s economic health, potential tariffs from the Trump administration, and declining local yields weighed on investor sentiment. After losing 2.8% against the dollar in 2024—its third consecutive year of decline—the yuan rebounded slightly to 7.31 per dollar in onshore markets. This move is seen as an effort by Chinese authorities to stabilize the currency ahead of Trump’s return to the White House.

Geopolitical Factors Drive Dollar Demand

The dollar’s surge in 2024 was driven by various geopolitical factors, including conflicts in the Middle East and the ongoing war between Russia and Ukraine. These issues continue to support demand for the greenback as global uncertainty remains high.

Most Markets Open 2025 Lower

Posted on January 2, 2025January 2, 2025 by Ignacio Teson

The start of the year appears less favorable for equities, with market sentiment clouded by uncertainty surrounding Donald Trump’s policies and tighter Federal Reserve expectations.

Global stocks struggled for traction on Thursday after a volatile close to 2024, while the dollar weakened as investor confidence wavered ahead of Trump’s return to the White House.

Despite ending 2024 with an impressive annual gain of nearly 16%, global equities posted a 2% loss in December and opened 2025 down 0.05%. The pan-European STOXX 600 fell 0.25%, reflecting the cautious mood.

[[DAX-graph]]

U.S. stock futures showed signs of optimism, with S&P 500 futures rising 0.6% and Nasdaq futures climbing 0.8% before market open. However the S&P 500 index opened with a slight decline of 0.1%, settling at 5,880 basis points.

In contrast, Chinese markets suffered a sharp downturn, marking their weakest start to the year since 2016. Disappointing manufacturing data and unmet expectations for stronger policy support weighed heavily. The CSI 300 dropped 2.9%, the Shanghai Composite lost 2.7%, and Hong Kong’s Hang Seng slid 2.2%.

Markets worldwide are closely watching key economic indicators and inflation trends. The latest Chinese PMI figures, falling short of expectations, highlight ongoing challenges in the manufacturing sector.

Still, Chinese President Xi Jinping’s New Year’s speech offered a glimmer of hope, as he pledged more proactive policies to boost growth in 2025, signaling potential shifts in the region’s economic strategy.

Tragic New Year’s in the U.S.: 10 Dead and at Least 30 Injured in Mass Hit-and-Run

Posted on January 1, 2025 by Ignacio Teson

At least 10 people were killed and 30 others injured, several critically, after a vehicle plowed into a crowd in New Orleans, USA, on Wednesday, according to authorities.

The incident occurred during New Year’s celebrations, with the victims gathered in the famous Bourbon Street area, a popular spot for holiday festivities.

Police stated that numerous casualties were reported after a car allegedly hit a group of people. Witnesses indicated that the vehicle collided with the crowd, and the driver then fired a gun.

New Orleans Mayor LaToya Cantrell called the incident a “terrorist attack.” However, the FBI, which has taken charge of the investigation, has not yet confirmed the motive behind the incident.

Authorities believe the driver aimed to hit as many people as possible. The attack occurred towards the end of New Year’s celebrations, just hours before the AllState Bowl, an American football quarter-final game.

Police did not confirm whether the attacker was in custody or provide details about their condition. Images circulating on social media show several officers firing at the vehicle, while authorities investigate potential explosives found at the scene.

Later in the day, the suspect in the New Orleans NYE attack was identified as 42-year-old Shamsud Din Jabbar, who had an ISIS flag.

He was reportedly born and raised in Texas and served in the US Army.

Mexican Stock Exchange Experiences Worst Drop Since 2018

Posted on January 1, 2025 by Ignacio Teson

The leading index of the Mexican Stock Exchange (BMV), the S&P/BMV IPC, which tracks the most traded local stocks, rose by 1.38%, closing at 49,513.27 points on Tuesday, December 31. However, this comes one day after the index fell to its lowest point of the year.

The Mexican stock market experienced significant accumulated losses throughout 2024, driven by increasing economic and political uncertainty in Mexico, as well as currency exchange effects and the electoral victory of Donald Trump in the United States.

The S&P/BMV IPC started the year above 57,386.25 points, meaning it registered a 13.7% cumulative drop in 2024, marking its worst annual performance in the past six years.

Meanwhile, the FTSE BIVA, from the Bolsa Institucional de Valores (Biva), closed the last trading day of the year at 1,004.79 points, with a 15% cumulative decline.

Given the recent drops, and considering factors like exchange rates, the Mexican stock market offers attractive valuations based on fundamentals, leading to optimism for certain instruments, such as Fibras.

The subsequent election victory of Donald Trump in November heightened concerns over the future of the Mexican economy, with fears that his protectionist policies could jeopardize trade with the United States, one of Mexico’s main economic pillars. Trump, who will take office on January 20, has promised to impose significant tariffs on his top trade partners: Canada, Mexico, and China.

Bitcoin Starts 2025 Lower After Rising Over 120% in 2024

Posted on January 1, 2025 by Ignacio Teson

Bitcoin (BTC) began 2025 on a downward trend, still above $94,000, after closing 2024 with a 121% accumulated gain, making it one of the top-performing assets of the year.

For this year, cryptocurrency enthusiasts are expecting another Bitcoin rally, fueled by the pro-crypto regulatory outlook under President Donald Trump’s government in the U.S. Historical performance also supports these expectations, as Bitcoin has typically seen significant price increases in the years following “halvings,” when miners receive half the reward for authenticating new blocks on the blockchain. The last halving occurred in April of the previous year.

[[BTC/USD-graph]]

On the other hand, critics of digital currencies and new investors in the sector warn that much of the optimistic outlook may already have been priced in over the past few months, particularly after Trump’s election. As a result, [[BTC/USD]] and other cryptocurrencies may have little room for substantial gains in the coming months without new catalysts to justify significant capital inflows into the market.

Bitcoin Outlook

Analysts suggest this may partly explain Bitcoin’s weak performance in December, when the cryptocurrency fell 3.2%, in line with the disappointment in risk markets due to the U.S. Federal Reserve’s (Fed) interest rate cuts forecasted for 2025.

As of today, Bitcoin was trading at $94,189, down 1.1% in the last 24 hours, according to CoinGecko. Ether (ETH), the native currency of the Ethereum network, was priced at $3,345.85, down 1.9%.

Latin American Markets Close Year with Significant Losses

Posted on January 1, 2025 by Ignacio Teson

Latin American markets saw little change on Tuesday, but stock and currency indices were set to close 2024 with sharp annual losses, as expectations of fewer interest rate cuts in the U.S. pushed up the dollar and capped a turbulent year for the region.

Trading was light on the final session of the year, with markets closed in Brazil.

The Mexican peso weakened by 0.3% yesterday and closed its worst year since 2008, as the Bank of Mexico appears ready to continue its monetary easing cycle, increasing concerns over trade with the United States.

[[USD/MXN-graph]]

Mexico’s main stock index rose 0.4% on Tuesday but recorded the sharpest annual decline among regional stock markets, falling by around 15%, the largest drop since 2018.

The MSCI regional equity and currency indices both rose by 0.3% and 0.2%, respectively.

Latin America Overall Performance

Latin American markets have performed significantly worse than emerging markets overall during 2024, with annual losses of 30.6% for regional equities and 11.2% for currencies.

The currency index broke a two-year streak of gains, posting its worst annual loss since 2020, while Latin American equities suffered their largest annual drop since 2015.

The dollar and Treasury yields have risen in December after the U.S. Federal Reserve signaled a more cautious pace of interest rate cuts in 2025, putting considerable pressure on emerging market assets.

Latin American economies, in particular, have struggled this year due to slower growth in China, a key consumer of commodities, political unrest, and inflation.

For 2025, most investors are expecting fewer rate cuts from the Fed, and anticipate that policies under the new U.S. president, Donald Trump, will continue to support the dollar, further weighing down returns on investments in emerging markets.