EUR 100.00 For Business Accounts Only

IBERIAN DAILY 15 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACERINOX, ARCELOR MITTAL, FERROVIAL.

MARKETS YESTERDAY AND TODAY

The inversion of the curve drags down stock markets
European markets opened with losses that grew to above -2.0% as sell offs began to spread in view of the fear that the US curve would invert. In the Euro Stoxx, the more cyclical sectors like Basic Materials, Banks and Technology were hit the hardest, whereas defensive sectors like Real Estate, Food and Utilities fell the least. On the macro side, in Germany the 2Q’19 GDP contracted in line with expectations, although on the YoY level it fell less than expected thanks to the upward revision of the historical data. In the euro zone, the 2Q’19 GDP confirmed the 0.2% QoQ data, as expected. In the UK, July’s inflation rose more than expected. Separately, the Labour leader J. Corbyn requested the rebel Tories support him as shadow PM in order to block a no-deal Brexit and call a snap election. In the US, import prices fell less than expected in July. Meanwhile, J. Bullard was optimistic regarding the US economy and the Fed’s leeway to act. Separately, Reuters warned that the US Govt. does not expect concessions from China after Trump postponed tariffs. In China, housing prices saw their monthly and YoY advances slow. In US business results, Macy’s, NetApp and Cisco Systems released disappointing earnings.
What we expect for today
The markets would open with a slight rally after the strong sell-offs yesterday, but with all eyes on the US 2Y/10Y slope, which is now inverted. Currently, S&P futures are up +0.5% (the S&P 500 closed -0.7% below its price at the closing bell in Europe). Volatility in the US rose (VIX 19.8%). Asian markets are falling slightly (Japan -1.3% and Hong Kong -0.05%).
Today in the US we will learn July’s retail sales and industrial output, as well as August’s Philadelphia Fed and Empire indices. In US business results, Walmart and Nvidia, among others, will release their earnings.