Report
Research Department
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IBERIAN DAILY 04 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, SANTANDER, TALGO, TELEFÓNICA.

Trump and the job market lead to another market selloff
The tariff rise approved by D. Trump to dozens of countries instead of lower tariffs as part of the negotiations under way and the slowdown signs of the US economy led to losses >-2.5% in European stock markets. Thus, in the STOXX 600 last week was marked by the earnings calendar and by Friday’s sell-off where energy was the only sector not ending in negative territory, whereas Autos and Basic Resources were the worst performers on the week. On the macro side, in the euro zone, July’s final manufacturing confirmed the preliminary data whereas July’s inflation remained at the previous month levels (above expectations). In the US, non-farm job creation came in far below expectations and the previous data was cut by more than 100,000 individuals whereas wage gains rose at a higher pace than expected in July, showing some exhaustion in the job market. On another note, June’s construction spending slowed down (worse), July’s manufacturing ISM fell expectedly (with sharp drops in the headings of orders and employment) and the July’s final University of Michigan consumer confidence was cut. OPEC+ agreed to raise oil production by 547,000 daily barrels in September amid growing concerns about the possible supply interruptions related to Russia. In US business results, Moderna beat expectations, Colgate-Palmolive, Linde, Exxon Mobil and Chevron were in line.
What we expect for today
European stock markets would open with gains of 0.5% following Friday’s corrections. Currently, S&P futures are up +0.4% (the S&P 500 ended flat vs. the European closing bell). Asian markets are falling (China’s CSI 300 -0.06% and Japan’s Nikkei -1.4%).
Today in the euro zone we will learn August’s SENTIX index and in the US June’s factory orders. In US business results Waters, On Semiconductor, Tyson Foods and Axon Enterprise, among others, will release their earnings.
Underlyings
Banco Santander S.A.

Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.

Talgo SA

Talgo is engaged in designing, manufacturing, repairing and maintaining the railway rolling stock, as well as the manufacturing, assembling, repairing and maintaining the engines, machinery and parts of the railway systems. Co. has an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and U.S.A. Co. has an active fleet in Europe, Asia and North America that comprises of 94 high-speed trains and more than 1,400 Talgo tilting passenger cars. Also, Co. purchases, redesigns, constructs, leases and sells all types of real estate.

Telefonica SA

Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.

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