EUR 100.00 For Business Accounts Only

IBERIAN DAILY 23 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AEDAS, IAG, INDRA, NEINOR, OHLA.

US attacks Iran
The risk of a military intervention by the US in Iran weighed on the market last week, and the 2-week deadline decided by D. Trump calmed stock markets. However, the movement of the military arsenal continued in the Middle East area, and in the end the US launched a weekend air attack on 3 Iranian nuclear targets. In the STOXX 600, Real Estate and Energy saw the biggest gains last week vs. Pharma and Retail that ended with the biggest drops. On the macro side, in the UK May’s retail sales came in worse than expected. In Germany, May’s production prices fell slightly less than expected. In the euro zone, June’s preliminary consumer confidence dropped unexpectedly. In the US, June’s Philadelphia Fed index came in worse than expected with the second worst data since 2024. In Japan, both the manufacturing and services PMIs for June rose more than expected. Separately, PM S. Ishida’s party suffered a big setback in the election for the Tokyo assembly (even worse than in 2017), increasing the doubts surrounding the parliamentary elections on 20 July. On the geopolitical front, Iran has promised retaliation for the US attack, and the Parliament has voted in favour of blocking the Strait of Hormuz, although the final decision is in the hands of the supreme leader, Ayatollah Khamenei. Lastly, NATO agreed to bring defence spending to 5.0% of the GDP by 2035, with Spain being an exception.
What we expect for today
European stock markets would open with contained corrections of around -0.5%, with oil companies seeing a good performance again. Currently, S&P futures are down -0.13% (the S&P 500 ended practically flat vs. the European closing bell). Asian markets are sliding (China’s CSI -0.41% and Japan’s Nikkei -0.23%).
Today in the eurozone and the US we will learn June’s preliminary PMI and existing home sales.

COMPANY NEWS

IAG, OVERWEIGHT
According to the press, BA (~55% of IAG’s capacity) would be readjusting its flight schedules in view of the rising geopolitical tensions between Israel-Iran-US, after the latter attacked Iranian nuclear facilities. This readjustment may not only be limited to BA. In this regard, note that Africa, Middle East and South Asia account for around 12% of the Group’s capacity, and we believe that flights to Asia Pacific (4% of the group’s capacity) could be also affected by the possibility of air space shutdowns. Additionally, the Group could be affected by the increase in fuel costs. Thus, note that at the end of the 1Q’25, 65% of the company’s remaining fuel needs for the year had been hedged at a weighted average price per quarter of around US$ 747.00/Mt (vs. US$ 800.00/Mt spot). Negative news, even though the region affected is not particularly relevant for the group, the increased tensions could discourage demand in other regions. As regards oil, in view of the high hedging for the rest of the year, if current prices remain unchanged, this could entail a ~-3% impact on EBIT’25 BS(e).