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IBERIAN DAILY 21 JULY + 2Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 2Q’22 results to be released over the coming days in Spain.

Correction ahead of ECB
Following the optimism from the start of the week, sell-offs reigned on European stock markets ahead of today’s ECB meeting, which could bring a +50bps rise instead of the 25bps expected and the announcement of the anti-fragmentation mechanism. Furthermore, Italy is facing a snap election after Draghi lost the support of his coalition partners in the appearance before the Parliament. In the Euro STOXX, Technology and Travel&Leisure saw the biggest gains, while Household Goods and Banks were the worst relative performers. On the macro side, in the euro zone July’s consumer confidence contracted more than expected. In Italy, the right-wing coalition parties of the Govt. led by Berlusconi and Salvini and 5SM abstained from the vote of confidence for Draghi, and thus despite beating it (95 yeas, 38 nays), the Italian leader is now closer to resigning, which would lead to a snap election. In the US, the poor real estate market figures continued, where second-hand home sales fell more than expected. In Japan, in its meeting the BoJ raised the inflation forecast to 2.3% for this year, which could signal a change in its hyper-accommodative monetary policy, despite keeping rates at -0.1% and a limit of 0.25% in 10Y debt yields. Lastly, Russia will resume natural gas supply to Europe through Nord Stream 1 at 30-40% of total capacity, the same level before the maintenance. The EC’s plan is to reduce consumption by -15% in anticipation of a cut to supply, as 12 EU nations are suffering partial or total cuts, with Germany among the most vulnerable. The Spanish Govt. has voiced its opposition to this reasoning, as it forces an effort that the country believes it should not have to make. In US business results, Biogen and Abbott Industries beat expectations, Nasdaq was in line and Baker Hughes released worse earnings than expected.
What we expect for today
The European stock markets would open flat awaiting news from the ECB. Currently, S&P futures are down -0.1% (the S&P 500 ended -0.25% lower vs. the European closing bell). Volatility in the US dropped (VIX 23.88). Asian markets are mixed (China’s CSI 300 -0.6% and Japan’s Nikkei +0.3%).
Today the ECB will meet. In the US we will learn weekly jobless claims and July’s Philadelphia Fed. In Italy, Draghi will give a speech before Parliament. In US business results, KeyCorp, AT&T, DR Horton and Domino’s Pizza, among others, will release their earnings. Debt auctions: Spain (€ 5.5 Bn in bonds due 2025, 2027 and 2032) and France (€ 12 Bn in bonds due 2025, 2028 and I/L due 2028, 2031 and 2053).