EUR 100.00 For Business Accounts Only

IBERIAN DAILY 11 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACCIONA, CAF.

Markets end a volatile week in the black
It was a very volatile week for the stock markets, with oversold stocks and equity rallies following the sharp drops of the previous week. The risk of Russia cutting off the gas supply to Europe after the programmed stoppage for maintenance work on the Nord Stream 1 pipeline scheduled to start today continues to increase, and with it the probability of energy rationing, with a strong impact on growth as from 4Q’22 in Europe. In this regard, Canada will allow the export of equipment to repair the pipeline. In any case, most indices performed well over the week, with the Ibex being the only Euro zone index that fell, after having been the best performer during the first half of the year. Thus, within the Euro STOXX, the best-performing sectors were Retail and Technology, vs. the bigger drops in Energy and Utilities. On the macro side, on Friday we learned the US employment data, which came in strong and did not show any signs of a recession. Non-farm job creation slowed less than expected and June’s unemployment rate remained flat at 3.6%, as expected. Wage returns remained at high levels (5.1%), which led the Treasury to widen. May’s final wholesale inventories were lowered unexpectedly. In Japan, the coalition parties reasserted their control of the Senate after the legislative elections. In China, concerns are growing about an outbreak in Shanghai of a highly contagious new variant of Omicron BA.5 amid fears of partial lockdowns (currently around 11% of the Chinese population would be under varying levels of restrictions.
What we expect for today
European stock markets would open with drops due to the situation of Covid-19 in China. Currently, S&P futures are down -0.65% (the S&P 500 ended -0.31% lower vs. the European closing bell). Volatility in the US increased (VIX 26.64). Asian markets are mixed (China’s CSI 300 -3.2% and Japan’s Nikkei +1.2%).
Today Eurogroup meeting. As for auctions, Germany will issue € 6 Bn in 6M T-bills and France € 5.4 Bn in 3, 6 & 12M T-bills.