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IBERIAN DAILY 13 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAF, FERROVIAL, TOURISM SECTOR.

US inflation weighed on all stock markets
In the end, May’s inflation in the US rose unexpectedly to 8.6% (40-year high), with the core data falling less than expected to 6.0%. The data resulted in sales in Europe above -3.0%, with the worse performance of the peripheral segment and generalised debt yield widening, mainly in the short-term segment, leading to flattening slopes. Thus, in the Euro STOXX, all sectors ended the week in negative territory, with Banks (mainly hit last Friday after the US inflation data) and Real Estate being the worst performers vs. the better relative performance of Retail and Energy. On the macro side, in Spain, May’s final inflation confirmed the preliminary 8.7% YoY level. The Bank of Spain cut expected growth for 2022 to 4.1% (vs. previous 4.5%) and for 2023 to 2.8% (vs. previous 2.9%), and it does not rule out the possibility of more cuts due to the global uncertainties. Fitch has stated it could cut Spain’s rating if a reliable reduction of the deficit and debt is not guaranteed. In France uncertainty surrounding the elections is growing following the results of the 1st round that suggest Macron would lose the majority in the Parliament due to the left’s surge (2nd round on 19 June). In Europe, ECB member Nagel backs the idea of acting cautiously, and a +50bps rate hike in September will depend on data and forecasts. In the US, the University of Michigan consumer sentiment index dropped more than expected in June.
What we expect for today
European stock markets would open with losses of -1.5% (Nasdaq tech has fallen more than -2% due to the doubts on growth) awaiting the Fed’s decision on Wednesday. French stocks would especially suffer in Europe due to the doubts surrounding the elections. Currently, S&P futures are down -1.5% (the S&P 500 ended down -0.9% vs. the European closing bell). Volatility in the US rose (VIX 27.75). Asian markets are sliding (China’s CSI 300 -1.4% and Japan’s Nikkei -2.9%).
Today no relevant macro data will be released. In auctions, Germany will issue € 3 Bn in 6M T-bills and France € 5.9 Bn in 3, 6 & 12M T-bills.