EUR 100.00 For Business Accounts Only

IBERIAN DAILY 03 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, ENDESA, FCC, MASMOVIL, PROSEGUR, UNICAJA.

MARKETS YESTERDAY AND TODAY

New outbreaks and the new restrictive measures continue to drag down markets
Following the poor macroeconomic data released last Thursday that dragged down European stock markets, Friday’s session (the last in July) saw new drops. In the Euro STOXX, Technology and Real Estate were the best-performing sectors while Construction and Automobiles were the worst performers. On the macroeconomic level, both Spain’s 2Q’20 GDP (-22.1% YoY vs. -19.7% expected and -4.1% 1Q’20) and the euro zone’s (-15% vs. -14.5% and -3.1%) came in worse than expected, and July’s inflation continued to rise more than expected. In the US, the University of Michigan confidence index fell to 72.5% in July vs. 73.2 previously and 73.0 expected, July’s Chicago PMI came in above expectations and the previous data, personal income fell more than expected and personal outlays climbed more than expected (both for June). On the political front, there is still no consensus between democrats and republicans on new unemployment subsidies. In China, the manufacturing Caixin PMI recovered more than expected, hitting expansive territory. In Japan, the final (1Q) GDP remained at -0.6% q/q from the preliminary data. In US Results Caterpillar and Merk came in better than expected, Chevron and Exxon worse and Colgate in line with expectations.
What we expect for today
European stock markets would open practically at Friday’s levels awaiting more drivers. Currently, S&P futures are flat (the S&P 500 was up +1% vs. its price at the closing bell in Europe). Volatility in the US moderated (VIX 24.46%). Asian markets are mixed (Japan +2% and Hong Kong 0.9%).
Today in Germany and the euro zone we will learn the manufacturing PMI, in the US the manufacturing ISM and June’s construction expenses. In debt auctions: Holland (€ 4 Bn in 3 & 10M T-bills), Germany (€ 4 Bn in 6M T-bills) and France (€ 7 Bn in 3, 6 & 12M T-bills). In US business results, Berkshire Hathaway, Tyson Foods, Mckeeson Corp, Eastman Chemical, Loews, Clorox, among others, will release their earnings.

COMPANY NEWS

UNICAJA –2Q’20 Results in line.
The bank generated € 15 M of Net Profit, in line with expectations, with better performance in Operating Profit (+58% vs. around +28% expected), offset by higher coverage in repossessed assets. Revenues grew +16% vs. 2Q’19 (vs. around +6% vs. expected level), driven by trading revenues, as both NII (-2% vs. 1Q’20 and -1% expected) and fee revenues (-15% vs. 1Q’20, in line) were weak. Costs fell -6.5% vs. 1Q’20 (and vs. -1% expected) due to operating expenses, with all the core headings being hit by the lockdown. CoR came in at 90bps (in line) with a recurring level of 15bps and around 75bps of Covid-19 upfront. CET 14.4% (+30bps, in line), with organic generation of around 10bps. We expect a neutral share price reaction.