EUR 100.00 For Business Accounts Only

IBERIAN DAILY 08 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, GRUPO CATALANA OCCIDENTE, IBERDROLA, NATURGY, REPSOL, TOURISM SECTOR.

MARKETS YESTERDAY AND TODAY

Threatening to rally
Most of the euro zone stock markets closed with gains, except the IBEX which remained under pressure due to its value slant. The US was also unable to consolidate the rally, with defensive stocks performing the best ahead of the release of the Fed meeting minutes. Thus, in the Euro STOXX most sectors closed with gains, with Household Goods and Utilities the best performers, whereas Banks and Travel & Leisure posted the biggest losses. On the macro side, the EC raised its growth estimates for the euro zone this year to +4.8% YoY from the previous +4.3% and +4.5% BS(e). In Germany, industrial output (MoM) fell unexpectedly in May. On another note, the ECB, after 20 years, changed its inflation target to 2.0% with room for temporarily exceeding it vs. the previous target “below but close to 2.0%”. In the US, the Fed minutes showed the warning of several members that the conditions for a tapering have materialized earlier than expected and that they should start by lowering MBS purchases.
What we expect for today
The European stock markets would see a slightly bearish opening with value stocks dragged down by the fall of interest rates (financials) and metal prices (basic resources). Currently, S&P futures are down -0.16% (the S&P 500 ended +0.15% higher vs. its price at the closing bell in Europe). Volatility dropped in the US (16.20). Asian markets are sliding (China’s CSI +-0.75% and Japan’s Nikkei -0.65%).
Today in the US we will learn weekly jobless claims and in Mexico and Brazil June’s inflation. In debt auctions: Ireland (€ 1.5 Bn in bonds due 2026, 2031, 2035).


COMPANY NEWS

REPSOL. Trading statement. We expect similar 2Q’21 Results to those seen in the 1Q’21. BUY.
The 2Q’21 trading statement (earnings release on 29/07) showed unsurprising operating variables in crude oil prices (+12.9% vs. 1Q’21 up to US$ 69.00/barrel) but surprises in output with a -11.9% drop vs. 1Q’21 to 562 kboe (below REP’s 2021 guidance of 625 kboe). The refining margin climbed, as expected, to US$ 1.50 (vs. US$ 0.20 in the 1Q’21), below REP’s 2021 guidance of US$ 2.00 and US$ 1.50 BS(e). Against this backdrop, we foresee € 445 M of Net Profit in the 2Q’21 (in line with the consensus and above € -258 M seen in 2Q’20). The 2Q’21 Results would underscore a similar pattern to that seen in the 1Q’21, with a rally in crude oil and prices that despite the lower output show good results in Upstream and positive performance of the chemical business that offset the low refining margins of the Industrial division.

TOURISM SECTOR
According to the press, the UK could announce today free-quarantine travels for fully vaccinated citizens with the new date starting on the 19th July (vs. 26 July previously expected). This would open the possibility to travel to the countries included in the amber list, basically all Europe. Travellers would still need a negative diagnostic test at their departure and another one two days after their arrival. According to the latest figures unveiled by World in Data, around 34 M UK citizens would be fully vaccinated. The confirmation of this news would be positive for companies linked to tourism, especially IAG (it has slid -18% from 2021 highs). Note that in the case of IAG, in a normalised year, the UK business accounts for 33% of total sales (globally). For Meliá, 14% of EBIT. For NH the possible impact is irrelevant bearing in mind its urban hotel business model.