EUR 100.00 For Business Accounts Only

IBERIAN DAILY 31 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BBVA, CAIXABANK, CATALANA OCCIDENTE, GRIFOLS, OHL, TELEFÓNICA

MARKETS YESTERDAY AND TODAY

While the coronavirus spreads…
The spread and the number of people affected by the coronavirus rose significantly (213 deaths and 9,692 affected) which dragged down global markets again. Although the WHO announced an international health emergency, it was against the implementation of restrictions on trade and transportation (that made easier a rally in US indices at the end of the session). In the Euro STOXX Basic Resources was the only sector not ending in the red, followed by Utilities vs. Energy and Technology that saw the biggest drops. On the macroeconomic level, in Germany, January’s unemployment reported a positive surprise, slowing down vs. the rises expected and January’s preliminary inflation grew to the highest levels seen in the past months. In the euro zone, January’s economic climate indicator climbed, beating expectations and the previous data while France’s 4Q’19 GDP came in slightly worse (0.9% YoY vs. 1.2% expected), which could affect the European aggregate data. In the UK, the BoE kept interest rates unchanged the day ahead of the materialization of Brexit. In the US, the first estimate of the 4Q’19 GDP beat expectations. On another note, the US administration has increased the warning of travelling to China to the highest level. In Japan, December’s retail sales slowed down slightly less than expected and industrial output came in better. In China, January’s manufacturing PMI was in line and that of services slightly better. The government outlined that the effect of the pandemic will not be seen in January’s data. In US Results Verizon and Westrock came in worse than expected, while Amazon, Biogen and Coca-Cola much better.
What we expect for today
Yesterday’s strong correction and the last-minute recovery in the US lead us to assume a bullish opening through the hardest hit sectors (Basic Resources and Energy). Currently, S&P futures are unchanged (the S&P 500 closed +1.04% higher vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 15.49%). Asian markets are mixed (Japan 1.00% and Hong Kong -0.40%).
Today, the UK will leave the European Union, In the euro zone, Spain and Italy we will learn the preliminary 4Q’19 GDP, in the euro zone January’s preliminary inflation, in the US December’s personal income and outlays and the University of Michigan Consumer Confidence index. In US business results, Phillips and Aon, among others, will release its earnings.


COMPANY NEWS
BBVA. Better results than expected thanks to NII and trading revenues. SELL
Recurring Net Profit reached € 1.164 Bn, around +10% above expectations (reported Net Profit € -154 M), due to better NII (+5.3% vs. 4Q’18; +4% vs. expected), higher trading revenues (double the expected level) and a lower tax rate. On the negative side, costs rose sharply (+4.6%; +2% vs. expectations), especially in Mexico and the US. By regions, the best performance came in Spain (thanks to trading and fee revenues) and Turkey (due to NII and costs). On the negative side, in the US the slowdown in NII is confirmed, as well as a rise in CoR. CET1 reached 11.74% (+18bps, vs. 11.63% expected). The company has announced the date for its Investor Day (24 March), where it will provide an updated strategy. Final DPS of € 0.16/sh. (+0%, 3% yield), in line with BS(e). We expect a slightly positive market reaction.

CAIXABANK. 4Q’19 Results came in worse in NII and significantly better in the rest of headings. BUY.
4Q’19 Results came in worse in NII (on lending slowdown, worse Euribor and lower ALCO). On the positive side, we stress the growth in fee revenues from insurance and asset management. With this in mind, core revenues grew slightly above +1% (vs. +1% guidance and +0.8% expected). Very good performance of costs (-1.3% vs. 3Q’19 and vs. flat expected) and CoR at 15bps (