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IBERIAN DAILY 06 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, INDITEX.

IBEX reaches 14,200
Stock markets ended stable in a session in which the ECB followed the expected script. In the STOXX 600, the best-performing sectors were cyclicals like Basic Materials and Construction, whereas Consumer Goods and Chemicals ended with the biggest drops. On the macro side, in Germany industrial orders rose unexpectedly in April. In the euro zone, the June ECB meeting brought a -25bps rate cut, as expected, and C. Lagarde suggested the monetary cycle policy would be reaching its end but insisting that they are in a good position to decide what to do depending on the data to be released. In the new forecasts, the organisation did not revise the 2025-27 GDP, which remained at 0.9%, 1.1% (vs. 1.2% previously) and 1.3%, respectively, whereas it lowered inflation forecasts to 2.0% for 2025 (vs. 2.3% previously), to 1.6% for 2026 (1.9% previously) and maintaining 2.0% for 2027, although the core figures remain at 2.4% for 2025 and 1.9% for 2026-27. Thus, a pause is most likely in July and the market has questioned the additional cut expected in December (Euribor futures through Dec’25 at 1.81% vs. 1.73% before the meeting). In the US, weekly jobless claims rose unexpectedly, while the trade balance for April saw its deficit reduced more than expected (to a low since Sep’23) after the purchases moved forward in 1Q’25. On the geopolitical front, after a phone conversation with Xi Jinping D. Trump announced a meeting with China and US trade delegations, suggesting progress on the negotiations of rare earth although no agreement in principle was specified.
What we expect for today
European stock markets would open with slight drops and with worse performance from cyclicals in a session awaiting the US employment data. Currently, S&P futures are up +0.36% (the S&P 500 ended -0.97% lower vs. the European closing bell). Asian markets are mixed (China’s CSI 300 -0.1% and Japan’s Nikkei +0.44%).
Today in Germany we will learn April’s industrial output, in the euro zone the 1Q’25 GDP revision and April’s retail sales and in the US non-farm job creation, the unemployment rate and salary gains (all for May).


COMPANY NEWS

INDITEX. 1Q’25 results to be hit by FX and continuity in the trading update. OVERWEIGHT
We expect continuity in 1Q’25 LfL sales (to be released on 11/06) vs. the indications from the beginning of the quarter (around +4% in 01 Feb-10 Mar, but improving in the last week to +7%), which should lead sales to grow more than +5% in 1Q’25, although the reported level will be less (around +3%, due to the FX effect). We expect the gross margin to remain stable at ~69.6%, whereas costs will put slight pressure on margins (slightly negative spread vs. sales), bringing EBIT growth to below +2% (-25bps on the margin to 19.8%). We do not expect any surprises in the 2Q’25 trading update (May-09 June), with sales growing around +6%, confirmation of the 2025 target of a stable gross margin (BS(e) and consensus in line) and a possible revision of the FX impact (-1% target), which in any event is already priced in (the stock has fallen -2% since the FY2024 Results in March and -13% vs. IBEX).