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IBERIAN DAILY 05 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAF.

After a good week, the solid US job data dragged down stock markets on Friday
It was a good week for most stock exchanges (with the exception of the Ibex, which ended with slight drops) despite Friday’s corrections after the US job report that beat all expectations. In the Euro STOXX, Retail and Consumer Goods were the best performers last week vs. the drops of Chemicals and Real Estate. On the macro side, in the euro zone production prices fell more than expected. Separately, the EU set a ban on maritime Russian crude oil imports above US$ 60/barrel (2/3 of its exports to Europe), although oil in the Urals was trading “only” 5% above this level. The measure, which comes into effect today, will prevent shipping lines, insurers and reinsurers in Europe from participating in selling the crude, which will make placing it more difficult. In parallel, today the ban on buying Russian crude oil for the rest of the G7 nations comes into effect. In Spain, November’s unemployment figure dropped more than expected. In the US, employment data was solid, with more jobs than expected created (263,000), the unemployment rate remained at 3.7% and wages grew above expectations, suggesting larger rate hikes in the medium term due to the effect from the second round. In this regard, C. Evans of the Fed expects a slower rate increase pace in 2023, but to a higher level than the market expects. In China, November’s services Caixin PMI fell more than expected. Meanwhile, the Govt. continues to relax Covid measures (obligation to get tested). The ordinary meeting of OPEC+ with Russia brought no changes on production levels for the coming months, awaiting positive surprises in demand for 4Q’22 and leaving the door open to another meeting at any point in the future to take new measures.
What we expect for today
European stock markets would open flat amid fears about the higher probability of rate rises from the Fed. Currently, S&P futures are down -0.10% (the S&P 500 ended up +0.35% vs. the European closing bell). Volatility in the US dropped (VIX 19.06). Asian markets are climbing (China’s CSI 300 +1.8% and Japan’s Nikkei +0.02%).
Today Eurogroup meeting. In the euro zone we will learn November’s final PMI, Sentix investment confidence and October’s retail sales, in Spain November’s services PMI, and in the US October’s factory orders.