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IBERIAN DAILY 20 FEBRUARY + 4Q’25 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ELECTRICITY SECTOR EUROPE.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’25 results to be released over the coming days in Spain.

Geopolitical tensions back in the spotlight
European stock markets were back in the red, with Iran in the spotlight and a possible US military intervention in the next few days. In the STOXX 600, almost all sectors ended with losses, led by Basic Materials (the best performer the previous day) and Utilities, with Food and Telecoms posting gains. On the macro side, in the euro zone February’s preliminary consumer confidence recovered less than expected. In the US, February’s Philadelphia Fed index rose more than expected to levels from Sep’25. Weekly jobless claims fell unexpectedly and December’s trade deficit rose more than expected. In Japan, January’s inflation fell more than expected, but with heavy distortion due to the subsidies coming into force. In geopolitics, Trump has given Iran a maximum of 10 days to accept a nuclear treaty while he awaits the arrival of the aircraft carrier Gerald R. Ford and the warships accompanying it. Today, five European countries have announced a joint plan to develop a low-cost air defence system. In US business results, Targa and Deere beat expectations, Walmart was in line.
What we expect for today
European stock markets would open with gains of +0.5%. Currently, S&P futures are up +0.3% (the S&P 500 ended flat vs. the European closing bell). Asian markets are mixed (China’s CSI 300 closed, Japan’s Nikkei -1.1% and South Korea’s Kospi +2.2%).
Today in the UK we will learn January’s retail sales, in the euro zone February’s preliminary PMIs and in the US February’s PMIs, personal outlays and December’s core consumption deflator, as well as the final University of Michigan consumer confidence. In US 4Q’25 Results PPL Corp, among others, will release its earnings.


COMPANY NEWS

ELECTRICITY SECTOR EUROPE. Regulatory uncertainty on the CO2 rights market
Yesterday the regulatory risk was once again in the spotlight in the sector amid fears that the EU could reopen the reform of the CO2 market following the Italian Royal Decree introducing a clawback on carbon costs when setting wholesale prices (in principle this will not be applied immediately). In any event, the impact would be very different in Italy, where has would set the price most of the time, than in Spain, with more renewable energy and less weight from the cycle in price setting. We believe the drops in the Utilities sector yesterday (around -4% in Italian companies and around -3% in Spanish companies) would be excessive, and in part they may have been underpinned by the sector’s solid performance in 2026.