IBERIAN DAILY 16 JUNE (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, BBVA, FCC.The ECB bails out the peripheral segment and the Fed raises rates more quickly
Ahead of the Fed’s meeting, European stock markets rallied after the announcement of the ECB’s extraordinary meeting, where the latter decided to offer flexibility in reinverting maturities in the emergency programme and to continue searching a new anti-fragmentation tool for the European Union in order to contain the hike in peripheral debt. Thus, in the Euro STOXX all sectors, with the exception of Energy, ended with gains, led by Insurance and Travel&Leisure. On the macro side, in the US, the Fed decided to raise rates by75bps to 1.5%-1.75% and left the door open to more +75bps rate hikes, although it warned that this will not be the norm, as the Fed now expects to raise rates to around 3.4% in 2022, 3.8% in 2023 and 3.4% in 2024, whereas it cut growth slightly for 2022-23 and raised inflation in 2022. May’s retail sales dropped unexpectedly although excluding automobiles and gasoline they rose slightly. Meanwhile, June’s NAHB index dropped in line with expectations, the Empire index fell more than expected and import prices ex crude oil slid unexpectedly In Brazil, the Central Bank decided to raise the reference rate (Selic) by 50bps to 13.25%. In China, housing prices slowed their drop in May. On the geopolitical side, Russia announced a new cut to gas supply through the Nord Stream 1 pipeline (affecting Germany and Italy), which would reach 60% vs. the 40% announced previously.
What we expect for today
European stock markets would open flat with some bearish bias with the good performance of defensive companies. Currently, S&P futures are down -0.13% (the S&P 500 ended up +0.4% vs. the European closing bell). Volatility in the US fell (VIX 29.62). Asian markets are mixed (China’s CSI 300 -0.1% and Japan’s Nikkei +0.6%).
Today in the euro zone Eurogroup meeting, in the UK BoE meeting. In the US we will learn May’s construction licenses, June’s Philadelphia Fed and weekly jobless claims. In debt auctions: Spain (€ 5 Bn in bonds due 2027, 2030, 2037) and France (€ 13 Bn in bonds due 2025, 2028, 2029 and I/L due 2027, 2036, 2040).
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.
Banco Bilbao Vizcaya Argentaria is an international financial group, engaged primarily on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal; providing real estate activity in Spain; providing services to international companies and investment banking, capital markets and treasury management services to clients; and providing the banking, insurance and pension businesses in Mexico and the U.S., as well as in South America.
Fomento de Construcciones y Contratas is the parent company of a group engaged in sanitation services, cleaning, maintaining, purification and distribution of water, construction of highways, hydraulic works, marine works, air and rail transport infrastructure, urban developments, housing, non-residential buildings, office buildings, toll highways, parking garages, marinas and water treatment plants. Co. is also engaged in the manufacture and sale of cement and cement infrastructures, such as precast concrete elements; and in the financial markets, and real estate development, leasing and tourism.
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