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IBERIAN DAILY 23 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ATRESMEDIA, BANKINTER, ELECTRICITY SECTOR, SIEMENS GAMESA.


Powell backs the market
After a poor opening, the market welcomed J. Powell’s speech before the US Senate, with the European stock markets easing their losses towards the end of the session. Within the Euro STOXX, defensive sectors such as Telecoms or Food were the best performers, whereas Basic Resources and Energy were the worst performers. On the macro side, in the United Kingdom, May’s inflation increased as expected to 9.1%, whereas core inflation fell unexpectedly to 5.9%. In the Euro zone, June’s consumer confidence deteriorated unexpectedly, nearing Covid-19 lows. In Spain, the Govt. will again cut the VAT rate on electricity from 10% to 5.0%. In the US, J. Powell stated that the Fed is willing to continue raising rates to bring inflation under control but aware of monetary tightening and with no intention of triggering a recession in the US economy. This suggests that the Fed will act depending on the macro scenario, raising rates somewhat about the neutral rate (2.5%) vs. 4.0% priced in by the market. In Japan June’s manufacturing PMI fell more than expected (with orders in contraction territory), whereas the services PMI climbed unexpectedly to Oct’13 highs. In China, President Xi Jinping ratified the 5.5% growth target for 2022 (vs. 4.1% expected by the consensus) and pledge to take the necessary effective measures to encourage consumption and investment.
What we expect for today
European stock markets would open with slight losses still amid recession fears although basic resources would recover part of the losses after the statements made by the Chinese president that fuelled iron ore while oil groups would remain under pressure due to the drop in crude oil. Currently, S&P futures are down -0.1% (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US fell (VIX 28.95). Asian markets are mixed (China’s CSI 300 +0.6% and Japan’s Nikkei -0.1%).
Today we will learn in the Euro zone June’s services and manufacturing PMIs, European leaders summit and in the US J. Powell’s second speech and weekly jobless claims. In Mexico, the BdM will hold its meeting.