EUR 100.00 For Business Accounts Only

IBERIAN DAILY 05 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAF.

Volatility to start September
It was a week of drops in European stock markets (which eased up in Europe on Friday), where the performance was marked by fears of tougher a monetary policy from the ECB in its upcoming 08/09 meeting, where markets think there is an 80% chance interest rates will be raised by +75bps. Thus, the IBEX 35 and ES50 ended the week down around -2%, whereas the DAX ended with moderate gains. The best-performing sectors in the Euro STOXX were Banks and Autos (with gains), whereas Technology and Consumer Goods ended with the worst relative performance over the week, with sharp drops. On the macro side, in the US, job creation once again beat expectations to 315,000 (the consensus expected a figure slightly below 300,000) and the revision of the July figure was minimal, average hourly wages rose to 5.2% YoY (-0.1% below expectations) and unemployment rose to 3.7% vs. 3.5% expected. In Brazil, industrial output grew less than expected. In Chile, in the end the new constitution was rejected. In Germany, the Govt. has launched a € 65 Bn household aid package due to rising energy costs, which in part will be financed with a tax on windfall profits on utilities, although with the aim of the measures having a different format to those of Spain and Italy. On the geopolitical side, Russia decided to close NS1 indefinitely (using technical problems as an excuse), while G7 agreed to set a price cap on Russian crude oil. Lastly, today OPEC could even decide to cut production slightly in view of the plunging crude oil prices. In this regard, rumours continue as to what measures can be taken to reform the electricity sector in the meeting on 09/09 (there is still mention of a cap on renewables, hydro and nuclear power, eliminating the taxes on windfall profits).
What we expect for today
The European stock markets would open with losses of up to -3.0% dragged down by the indefinite shutdown of the Nordstream I gas pipeline (gas in Europe is rising +31%). Currently, S&P futures are up +0.1% (the S&P 500 ended down -2% after the European closing bell). Volatility in the US fell (VIX 25.47). Asian markets are falling (China’s CSI 300 -0.6% and Japan’s Nikkei -0.1%).
Today is a holiday in the US. Also, we will learn in the EMU the Services PMIs for August, September’s Sentix investor confidence index and July’s retail sales, and in Mexico August’s consumer confidence. In the United Kingdom, a new PM will be elected today. Also, the OPEC will hold its meeting. In debt auctions: Germany (€ 5 Bn in 3M and 9M T-bills).