EUR 100.00 For Business Accounts Only

IBERIAN DAILY 16 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ELECTRICITY SECTOR, FERROVIAL.

MARKETS YESTERDAY AND TODAY

Advances in vaccine spur a rally... but Chinese retail sales disappoint
It was a session of green numbers in European markets, with almost all the indices rising more than +2% after the previous day’s drops. In the Euro STOXX, all the sectors rose except Real Estate and Telecoms, with Travel & Leisure and Industrials leading the gains. On the macro side, in the UK July’s inflation rose more than expected. In Spain, in the end the courts upheld the lockdown of more than 160,000 people, as almost 1,000 new cases were recorded. In the US, the Empire manufacturing index and industrial output for May rose more than expected, and the Fed’s Beige Book for July stressed the quick pace of recovery in the economy, although it warned that there is much uncertainty. The Trump administration would be considering placing limits on members of the Chinese communist party’s access to the US, although it would have ruled out other sanctions for now. In China, the 2Q’20 GDP rose more than expected, industrial output was in line and June’s retail sales came in below expectations. In US business results, Bank of NY, Goldman Sachs and US Bancorp beat expectations, whereas PNC Financial Services released disappointing earnings.
What we expect for today
Stock markets would open with slight drops in light of the disappointing retail sales data for June in China, despite a better 2Q’20 GDP figure, which would show a fragile recovery of consumer confidence. Also, the lack of catalysts from today’s ECB meeting and low expectations on the European Council meeting tomorrow (Spain recognises that it will have to make concessions over the Reconstruction fund and the Netherlands is against it) will also have an impact. Currently, S&P futures are flat (the S&P 500 was up +0.65% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 27.75%). Asian markets are falling (Japan -0.68% and Hong Kong -1.17%).
Today in the Euro zone, the ECB will meet. Also we will learn in the US the retail sales data, the Philadelphia Fed manufacturing confidence index, the NAHB real estate index, the weekly jobless claims data and business inventories. In debt auctions: Ireland will place € 750 M of T-bills, Spain € 6 Bn of bonds due 2025, 2029, 2035 and 2050 and France € 12 Bn of bonds due 2026, 2027 and I/L bonds due 2026, 2029 and 2047. In US business results, Bank of America, Morgan Stanley and Netflix, among others, will release their earnings.