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IBERIAN DAILY 14 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AEDAS HOMES, GRIFOLS.

US macro data strengthens expectations of rate cuts and drives markets
The US production prices data, which came in below expectations, also foreshadows solid inflation data for today (14:30 CET) and helps strengthen expectations of the Fed cutting rates in September to halt the deterioration of the job market and lengthen the economic cycle. In any event, the future market continues to price in slightly less than -50bps in September and more than -100bps by the end of the year, which still seems overly aggressive for the Fed. That said, expectations of rate cuts spurred the markets. In the STOXX 600, the best-performing sectors were those most sensitive to rates like Utilities and Real Estate, in addition to Pharma and Industrials, with the worst performers being Basic Materials and Energy, practically the only ones to see profit taking. On the macro side, in the UK June’s unemployment rate unexpectedly fell slightly. In the euro zone and in Germany, August’s ZEW index fell more than expected (negative in Germany, both current conditions and outlook). In the US, July’s production prices rose less than expected. This morning in China, bank loans to the real economy contracted for the first time in 19 years, reflecting the lack of appetite from companies and households, as well as the weak internal demand. In Japan, the current PM F. Kishida announced he will not run for reelection in September. In US business results, Home Depot released earnings in line with expectations but cut its growth targets.
What we expect for today
Stock markets would open with gains of around +0.3%. Currently, S&P futures are up +0.5% (the S&P 500 ended up +0.6% vs. the European closing bell). Asian markets are mixed (Japan’s Nikkei +0.5% and China’s CSI 300 -0.5%).
Today in the US and UK we will learn July’s inflation, in the euro zone the 2Q’24 GDP and June’s industrial output and in Brazil June’s retail sales. In US business results, only Cisco Systems and Cardinal Health will release their results.