EUR 100.00 For Business Accounts Only

IBERIAN DAILY 20 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENERGY SECTOR, INDRA, SANTANDER, TELEFÓNICA.

Stock exchanges underpinned by business results
The US core inflation data caused stock exchanges to resume gains thanks to some easing in inflation and rate cut expectations in 2025 and tightening in sovereign debt yields. The start of the earnings season in the US, the ceasefire in Gaza and the good macroeconomic data released in China last Friday contributed to this performance. Thus, in the STOXX 600, the best-performing sectors were Consumer Goods and Banks, whereas defensive industries such as Pharma and Food ended with the biggest drops. On the macro side, in the euro zone, December’s final inflation confirmed the 2.4% YoY data and the core data 2.7%. In the US, December’s building permits and housing starts came in above expectations, as well as December’s industrial output. In China, the PBoC left the interest rate on 1Y and 5Y loans unchanged at 3.1% and 3.6%, respectively. In US business results, Schlumberger, Citizens Financial and Regions Financial beat expectations, and Fastenal came in slightly worse than expected.
What we expect for today
Stock markets would open with a slight bullish slant, but they would lose momentum throughout the session with less volume than normal due to the US holiday. Currently, S&P futures are flat (the S&P 500 ended down -0.1% vs. the European closing bell). Asian markets are climbing (China’s CSI 300 +0.7% and Japan’s Nikkei +1.2%), boosted by a friendly chat between Trump and Xi Jinping on TikTok, Taiwan, the fentanyl crisis and trade.
Today in the UK we will learn the number of unemployed and ILO’s unemployment rate, in Germany January’s ZEW index and in the US Trump will be sworn in as President and it will be a holiday for Martin Luther King Day. In US business results, Bridgford, among others, will release its earnings.


COMPANY NEWS

INDRA, OVERWEIGHT
Following Marc Murtra’s resignation as the group’s Board member and Executive Chairman, IDR’s Board of Directors has agreed to name Angel Escribano as his replacement with the same functions, and thus he will be the new Executive Chairman and Board member in IDR. Jose Vicente de los Mozos will stay on as IDR’s CEO. Note that Escribano is the second-largest shareholder in IDR with a 14.3% stake, behind only the SEPI (28%). We do not expect a significant impact, at least not in the short term, as we understand Escribano’s leadership (second-largest shareholder in the company and with experience in the defence sector) will bring continuity with the plans the company already has in place.

TELEFÓNICA, OVERWEIGHT
The company made public last Saturday that the Board had decided to terminate the contractual relationship with José María Álvarez Pallete (current head manager and executive chairman after 9 years) and to appoint Marc Thomas Murtra to replace the latter (Indra’s executive chairman, without experience in the telecommunications business). In its communiqué the company outlines that the decision has been made in view of the new shareholding structure and the wish of some of the reference shareholders to initiate a new phase in the company. Even though the decision made by TEF’s Board represents a relative surprise (the renewal of Mr Pallete’s mandate was expected this year) and we do not foresee a significant market reaction today, we do believe that this decision could weigh on the share price in the short-term as it opens a period of uncertainty until the plans of the new chairman for the company’s business are made public. Furthermore, the active implication of the Spanish government in the change of the chairman also opens the door to speculations on its future potential implication on the company’s decisions.