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IBERIAN DAILY 05 MAY + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCELOR MITTAL, CELLNEX, TÉCNICAS REUNIDAS, TELEFÓNICA, UNICAJA.

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’22 results to be released over the coming days in Spain.

Stock markets welcome the Fed’s rise of only 50bps
The European stock markets ended in the red (with growth underperforming value) ahead of the Fed meeting as EU sovereign bond yields tightened again to levels unheard of since 2015, causing the Ibex to move away from 8,600 points. In the end, the Fed confirmed the 50bps rate hike, and even though it left the door open to a new 50bps cut at the next 2 meetings, stock markets welcomed that Powell dispelled the scenario of 75bps rises. Within the Euro STOXX, almost all sectors closed with losses, led by Household Goods and Basic Resources, vs. the better relative performance of Media and Travel & Leisure. As for macro data, in the Euro zone, April’s retail sales fell more than expected. On another note, Brussels’s proposal of Russian crude oil and refined products embargo is not yet unanimously supported even though it would be gradual and highly dependent countries such as Hungary and Slovakia would be exempt until the end of 2023. In the US, the private employment data and April’s ISM non-manufacturing index fell more than expected. On the other hand, April’s final services PMI was raised. In Brazil, the Central Bank raised the Selic rate by 100bps up to 12.75%, as expected. In US business results, Moderna and Marriot came in better, CVX Health in line.
What we expect for today
European stock markets would open with gains >+1.5%, underpinned by the US rises with the better performance of growth sectors. Currently, S&P futures are flat (yesterday the S&P 500 ended +3.23% higher vs. the European closing bell). Volatility in the US decreased (VIX 25.42). Asian markets are sliding (China’s CSI 300 -0.2%, Japan’s Nikkei is closed).
Today in US business results, Zoetis, Royal Caribbean, Monster, and Kellog, among others, will release their earnings. In debt auctions: Spain (€ 5.5 Bn in bonds due 2027, 2029, and I/L bonds due 2033 and 2071) and France (€ 11 Bn in bonds due 2032, 2040 and 2053).

COMPANY NEWS

ARCELOR MITTAL. 1Q’22 Results above expectations in EBITDA, 2022 demand forecast adjusted. BUY
The results beat expectations in EBITDA (US$ 5.08 Bn vs. US$ 4.53 Bn BS(e) and US$ 4.57 Bn consensus) due to the strong steel prices (positive effect from automotive contracts vs. Q4) and the boost from Mining (11% EBITDA). Thus, despite the expected drop by us and the consensus, Q1 was in line with what was seen in 4Q’21. Apart from this, the company has cut its steel outlook’22 ex-China to -0.5%/+0.5% (vs. +2.5%/+3% previously) in view of the inflationary pressure in Europe and the war in Ukraine. MTS has announced a new US$ 1 Bn buyback (3.7% market cap), to be carried out in 2022 (meaning € 2 Bn of buybacks on the year, 7.4% market cap) and a DPS of US$ 0.38/sh. (1,3% yield). We expect a lacklustre reception in view of the cut to growth in demand (it has underperformed the IBEX by -4% in 2022).