EUR 100.00 For Business Accounts Only

IBERIAN DAILY 12 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AENA, BANKING SECTOR, CAF, CAIXABANK, FERROVIAL.

Fears of stagflation
The drops on global stock markets sped up following the release of the IMF’s new forecasts, which warned of a worsening outlook for the global economy, although the opening bell in the US reduced the losses. In the Euro STOXX, sell-offs prevailed, with the solid performance in Retail and Household Goods standing out, whereas Technology (for the second straight day) and Utilities ended with the biggest losses. On the macro side, the IMF’s new forecasts cut global growth for 2023 to 2.7% (vs. 2.9% in July and 3.8% in January) due to higher inflation, the war in Ukraine and the downturn in China. The biggest cuts came in Europe, which in 2023 would only grow +0.5%, with Germany and Italy seeing contractions (-0.3% and -0.2%, respectively). Furthermore, inflation will hit a peak at the end of this year at around 9% and will remain very high for longer than expected. In the case of Spain, the expcted growth is 1.2% and 4.9% inflation for 2023. In the UK, August’s ILO unemployment rate beat the consensus figure slightly. The BoE would be studying the possibility of increasing bonds under the purchase programme, including those linked to inflation to avoid a pension crisis. In the US, Biden warned of the possibility of a US economy recession in 2023, but in any event stating it would be very slight. In Brazil, September’s inflation fell in line with expectations, standing at 7.2%.
What we expect for today
European markets would open with slight losses, with the IMF’s cut to growth forecasts weighing down and with all eyes on the US inflation data, which is expected to see a rise in the core component. Currently, S&P futures are up +0.4% (the S&P 500 ended -0.9% lower vs. the European closing bell). Volatility in the US rose slightly (VIX 33.43). Asian markets are falling (China’s CSI 300 -0.74% and Japan’s Nikkei -1.92%).
Today in the euro zone we will learn August’s industrial output and in the US September’s production prices and Fed meeting minutes. Debt auctions: Italy (€ 6 Bn in 12M t-bills) and Germany (€ 4 Bn in bonds due 2032).