EUR 100.00 For Business Accounts Only

IBERIAN DAILY 25 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCELOR MITTAL, FERROVIAL.

MARKETS YESTERDAY AND TODAY

Draghi bids farewell to a listless market
The ECB kept benchmark rates unchanged at Draghi’s last speech at the helm of the ECB, which brought few surprises, focused on defending the accommodative policies taken during his term while he warned about the high recession risks, requesting an expansive fiscal policy. With this the Euro Stoxx closed flat, where the best-performing sectors were Basic Materials and Pharma vs. Telecoms and Real Estate, which closed with slight losses. On the macro side, in Spain the job market showed greater cooling than expected in the 3Q’19, and despite the fact that the unemployment rate fell to a low since 4Q’08 (13.9% vs. 13.75% expected), the number of unemployed rose by 69,400 people and job creation moderated to 1.8% annually. In the euro zone, preliminary PMIs for October were disappointing, with the manufacturing index remaining at 45.7 and the services index rising only two tents to 51.8%. In the UK, the PM B. Johnson will request the Parliament elections on the 12th of December. In Mexico, the IGAE economic activity index slowed down unexpectedly in YoY terms. In the US, September’s preliminary core capital goods orders fell more than expected, weekly jobless claims fell more than expected and September’s new home sales fell slightly less. In US business results, 3M, American Airlines and Visa were in line with expectations, American Electric beat expectations and Twitter and Amazon.com released disappointing earnings.
What we expect for today
Stock markets would open flat with the energy sector dragged down by crude oil prices and the food and technology sectors by the earnings season. Currently, S&P futures are up +0.02% (the S&P 500 was down -0.04% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 13.71%). The Asian markets that are open are traidng with mixed results (Hong Kong -0.53% and Japan +0.06%).


COMPANY NEWS

ARCELOR MITTAL, BUY
The company would have announced a new price hike in the US (~25% of its EBITDA). Specifically, there is mention of a minimum increase of US$ 40/Mt for hot-rolled coil (+8%).
Very positive news, as we think the current situation of weak steel prices is not sustainable (this is at least be in the US). This situation should revert, with margins rising and perception of MTS improving, as the stock is pricing in an overly negative scenario (normalised EBITDA in perpetuity of US$~6.4 Bn vs. US$~7.8 Bn average over the past 10 years; +25% vs. 2019e).