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IBERIAN DAILY 04 MAY + 1Q’23 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, ARCELORMITTAL, ENDESA, TÉCNICAS REUNIDAS, TELEFÓNICA.

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 1Q’23 results to be released over the coming days in Spain.

The Fed leaves door open to rate hikes
It was a calm session ending with slight gains in Europe (except the IBEX, which fell below 9,100 points), and with all eyes on the Fed meeting. However, at the end of the US session, PacWest plummeted -50% after announcing it is looking for “investors”. In the Euro STOXX, the best-performing sectors were Basic Materials and Chemicals, with Energy and Travel & Leisure the best performers. On the macro side, in the euro zone March’s unemployment rate fell more than expected to 6.5%. Gas prices in Europe fell to a low since July’21 (-88% vs. the Aug’22 peak). In the US, the Fed raised Fed Funds by +25bps as expected to a range of 5.0-5.25% and the announcement leaves the door open to a pause in rate hikes, although Powell (who rules out a possible recession) insisted that future increases will depend on macro data, although the market already expects -75bps of cuts starting in Sep’23. Meanwhile, the non-manufacturing ISM for April rose more than expected (although the activity subindex fell more than expected), and April’s ADP employment survey showed a strong rise ahead of tomorrow’s employment data. In Brazil, the BCB maintained the Selic rate at 13.75% as expected, ruling out new rate hikes and stressing the fiscal advances made that would allow the monetary policy to be relaxed. In China, the Caixin manufacturing PMI fell unexpectedly in April. In US business results, Kraft Heinz beat expectations, Estee Lauder and Yum! came in below.
What we expect for today
European stock markets would open flat, with a slight bearish slant given the news on US regional banks and the ECB’s decision. Currently, S&P futures are up +0.20% (the S&P 500 ended -0.84% lower vs. the European closing bell). Volatility in the US rose (VIX 18.34). Asian stock markets are falling (China’s CSI 300 -0.13%, Japan’s Nikkei closed).
Today in the Euro zone the ECB will meet and we will learn the services PMI, in the US weekly jobless claims and 1Q’23 non-farm productivity and in Mexico April’s unemployment rate. In US business results, Apple, Booking, Moderna, Kellogg’s and Zoetis, among others, will release their earnings. Debt auctions: Spain (€ 6.75 Bn in bonds due 2026, 2028, 2040 and I/L due 2027).


COMPANY NEWS

ARCELORMITTAL. Better 1Q’23 Results in EBITDA, share buyback plan announcement through 2025. BUY.
1Q’23 Results came in better in EBITDA (US$ 1.82 Bn vs. US$ 1.70 Bn BS(e) and US$ 1.64 Bn consensus) and clearly better than the 4Q’22 Results against a backdrop of volume recovery in view of the finalisation of de-stocking process that offsets a slightly lower pricing. In terms of guidance, the company keeps its apparent consumption estimate of +2/+3% ex-China (vs. 2022). Lastly, the group announced buyback programme of 85 M shares (10.5% capital) through May’25 based on its cash generation expectations (meaning double-digit FCF yield). This should underpin the share price that has slid -8.1% vs. IBEX YtD.