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IBERIAN DAILY 16 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ATRESMEDIA, INMOBILIARIA COLONIAL, MEDIASET ESPAÑA, NATURGY.


MARKETS YESTERDAY AND TODAY


Euphoria on possible Brexit agreement
European markets rose in view of the possibility of a Brexit agreement being reached in the upcoming European summit on 17-18 October, although a disorderly Brexit was never ruled out. In the Euro Stoxx there were widespread gains, led by Banks and Autos, whereas Utilities and Consumer Goods brought up the rear. On the macro side, in Germany the ZEW expectations index fell less than expected, but along with the current situation component it suggests new drops in October’s IFO and stagnation of the German GDP. In the UK the number of unemployed rose once again in September, with the unemployment rate rising unexpectedly in August, confirming the weak job market and the drag on consumption. In the euro zone, the EU will impose antitrust measures on Broadcom. Separately, Brexit negotiators would have agreed on a draft to present to the EU tomorrow ahead of the summit, and if approved it will have to be voted on this Saturday in the British Parliament. Notwithstanding the Northern Irish party’s caution, despite the optimism everything suggests that more time is needed to negotiate. In the US, from the Fed, Bullard spoke in favour of new preventative rate cuts. In China, the M2 index accelerated its rise more than expected in September, as did total financing and new loans. On another note, the PBoC announced a US$ 28 Bn capital injection in the 1Y liquidity facility auction. Lastly, the Chinese Govt. threatened to retaliate against the US if Congress approves the measures to support Hong Kong demonstrators. In US business results, Goldman and Wells Fargo released disappointing results, whereas Citi was in line and JP Morgan beat expectations.
What we expect for today
The markets would open with profit taking following the Euphoria surrounding Brexit and the in view of China’s threats to retaliate against the US. Currently, S&P futures are up -0.26% (the S&P 500 was down -0.09% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 13.54%). Asian markets are rising (Japan +1.27% and Hong Kong +0.41%).
Today in the UK we will learn September’s inflation and production prices and in the US September’s retail sales and October’s NAHB construction sector confidence index. In debt auctions: Portugal (€ 1.25 Bn in 3M and 12M t-bills) and Germany (€ 1 Bn in 30Y bonds). In US business results, Bank of America, Abbott, Netflix and IBM, among others, will release their earnings.