IBERIAN DAILY 22 MARCH (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: CAF, CELLNEX, ELECTRICITY SECTOR, REPSOL.Powell reiterates his hawkish message, dragging down bonds
The European stock markets performed somewhat poorly yesterday, with all eyes on both the war in Ukraine (with the EU studying the possibility of imposing an oil embargo on Russia), China (where the suspension of the real estate company Evergrande from trading has given rise to new tensions) and the Fed, where the chairman J. Powell reiterated his intention of doing their best to fight inflation, leaving the door open to a +50bps rate rise at the next meeting. Thus, within the Euro Stoxx almost all sectors closed in the red, with Real Estate and Travel & Leisure being the worst relative performers vs. Basic Resources and Energy, which posted gains. On the macro side, in the US, the Chicago Fed activity index slowed more than expected in February.
What we expect for today
European stock markets would open with moderate drops, with cyclical stocks performing dragged down by Powell’s message, bond performance and flattening slopes, as well as rising oil prices (which will continue to support Energy). Currently, S&P futures are down -0.13% (yesterday the S&P 500 ended +0.47% higher vs. the European closing bell). Volatility in the US dropped (VIX 23.53). Asian markets are trading with mixed results (China’s CSI 300 -0.24%, and Japan’s Nikkei +1.48%).
Today we will learn in the US March’s Richmond manufacturing index. In debt auctions: Netherlands (€ 2.5 Bn in bonds due 2028).
COMPANY NEWS
CAF, BUY
According to the press, CAF will stop its manufacturing activity in Beasáin and Irún (2 of its 8 plants; 44% of sales’21) for 5 days starting tomorrow due to the shortage of supply as a result of the transport strike. Employees will recover these hours not worked over the coming months.
Negative news although with limited impact if it does not drag out, as the hours not worked are expected to be recovered (we would not foresee significant delays in deliveries) and we believe that the main effect will be some type of cost overrun (although limited, in principle). CAF has underperformed the IBEX by -9% YtD, yielding +46% upside.
Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
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