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IBERIAN DAILY 15 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKINTER, COLONIAL.

US inflation allows Fed to begin to gradually lower rates
European stock markets reeled in their gains towards the end of the session, despite that fact that US inflation data for July paved the way for the Fed to begin to lower rates in September, although there is no hurry. However, the US technology sector was affected by the rumours that the Dept. of Justice would be considering the possibility of separating Alphabet’s (Google) businesses for antitrust reasons. In Europe, in the STOXX 600 cyclical sectors like Travel & Leisure (driven by Flutter) and Autos led the gains, whereas Utilities and Basic Materials led the drops. On the macro side, in the UK general and core inflation for July fell more than expected. In the euro zone, the growth of 0.6% YoY for the GDP was confirmed, as well as 0.8% YoY for employment in 2Q’24. In the US, both general and core inflation slowed in line with expectations, although there was once again some recovery in ex-energy service prices. From the Fed, R. Bostic (Atlanta Fed) and A. Goolsbee (Chicago Fed) were in favour of beginning to lower rates in September, warning on job market risks. In China, July’s industrial output slowed more than expected and real estate investment contracted more deeply, whereas retail sales grew more than expected. In US business results, Cisco Systems was in line and Cardinal Health beat expectations.
What we expect for today
Stock markets would open with slight gains of up to +0.5%. Currently, S&P futures are up +0.2% (the S&P 500 ended up +0.1% vs. the European closing bell). Volatility on the S&P 500 (VIX) fell to 14.7. Asian markets are rising (Japan’s Nikkei +0.8% and China’s CSI 300 +0.7%).
Today in the US we will learn the Empire index, July’s Philadelphia Fed, retail sales and industrial output for June and weekly jobless claims. In US business results, Walmart, Deere and Applied Material will release their results.