IBERIAN DAILY 14 JULY (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACCIONA, ACCIONA ENERGÍA, ACS, ELECTRICITY SECTOR, REPSOL, TÉCNICAS REUNIDAS.Inflation remains relentless
The negative inflation data in the US accelerated losses in Europe. Despite being one of the day’s best performers, the Ibex fell below 8,000 points. Thus, within the Euro STOXX, almost all sectors ended with losses, led by Autos and Basic Resources, vs. the gains posted by Energy and Technology. On the macro side, in the Euro zone, May’s industrial output climbed above expectations. The EC cut its forecasts for the euro zone, currently expecting 2.6% growth in 2022 (vs. 2.7% previously) and 1.4% in 2023 (vs. 2.3% previously, where it raised inflation to 7.6% (vs. 6.1%) and to 4.0% (vs. 2.7%), respectively. Furthermore, the probabilities of a recession over the next 12 months in the German economy have risen to 55% (vs. 30% previously) according to investor surveys. In Spain, June’s inflation data confirmed the preliminary 10.2% figure (the highest since 1985), whereas in Germany, inflation stood at 7.6%. On another note, Gazprom has stated it cannot yet guarantee the safe operation of Nord Stream. In the US, June’s inflation increased three tenths more than expected to 9.1%, hitting a 40-year high, however, core inflation slowed one tenth to 5.9% but less than expected. The poor data underpinned a hawkish message from the Fed where R. Bostic suggested that all options are on the table to tackle inflation and L. Mester reiterated the need of leaving rates above neutral territory. With this in mind, the Fed Funds futures suggest 3.7% rates in Dec’22 from 1.50-1.7% currently, with rumours of rate rises in the next meeting of as much as 100bps vs. 75 thus far. In Japan, May’s final industrial output slowed down slightly more than expected.
What we expect for today
The European stock markets would open with slight gains, underpinned by cumulative oversales. Currently, S&P futures are down -0.1% (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US increased (VIX 26.82). Asian markets are rising (China’s CSI 300 +0.6% and Japan’s Nikkei +0.8%).
Today we will learn in the US the weekly jobless claims.
Acciona is the parent company of a construction group. Co. is engaged in general construction activities in the areas of civil engineering and buildings, including railways, marine and hydraulic works, motorways and airports, town planning, conduits, pavements, parking lots, and industrial and urban buildings. In addition, Co. is engaged in the provision of real estate services, the operation of parking lots, telecommunications, services, ecology and alternative means of energy. Co.'s operations are organized in six business divisions: Infrastructures, Real Estate, Energy, Water, Environmental & Urban Services and Logistic & Transport Services.
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Aedas Homes is engaged in the housing development business in Spain. The company has a portfolio of approximately 1.5 million square meters of land that it develops for residential purpose. Co. develops multifamily homes for the housing market in Madrid, Catalonia, Levante and Majorca, Costa del Sol and Seville.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Tecnicas Reunidas is a general contractor company based in Spain. Co. engages in the engineering, design, and construction of industrial facilities for refining and petrochemical, oil and gas, power, and infrastructure and industries sectors worldwide. Co. constructs nuclear plants, conventional thermal plants, and renewable energy and cogeneration facilities for power sector; refineries and facilities for petrochemicals; water treatment, desalination, waste management, air, land, and marine transport facilities; and liquefaction, and storage facilities, as well as oil and gas fields and pipelines. Co. also provides engineering, management and operating services for industrial plants.
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