EUR 100.00 For Business Accounts Only

IBERIAN DAILY 17 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CIE AUTOMOTIVE, ENCE

Awaiting a solution to the war, the Fed raises rates as expected
The European stock markets rallied sharply in the hope that Russia and Ukraine will continue to make progress on a neutrality agreement (there is talk of a 15-point draft) to stop the war. In this regard, Kiev would renounce NATO membership and set limits to its armed forces. The US and NATO would be questioning Russia’s real interest in negotiating. Thus, the Euro STOXX rallied sharply, led by Technology and Banks, whereas Energy and Utilities were the only sectors closing in the red. On the macro side, in the US, as expected, the Fed raised interest rates +25% and stated that the US economy was strong enough to withstand further tightening, leaving the door open to new rate hikes in the next 6 meetings to be held in 2022 and to starting balance reduction in the next meeting. As for data, retail sales increased less than expected in February, especially without the most volatile components, which fell unexpectedly. Moreover, January’s business inventories slowed in line with expectations and March’s NAHB real estate confidence index fell unexpectedly. In China, the Govt.’s messages yesterday promising to back the economy and the financial markets, as well as a resolution to the Technology sector’s problems were very well received by markets. In Brazil, the BdB’s Selic interest rate meeting resulted in a Selic rate hike from 10.7% to 11.75%, as expected.
What we expect for today
European stock markets would open with new gains, with Technology climbing, underpinned by the industry rally in China and in value sectors after the rate rise announced yesterday by the Fed. Currently, S&P futures are flat (yesterday the S&P 500 ended +0.89% higher vs. the European closing bell). Volatility in the US dropped (VIX 27.66). Asian markets are climbing (China’s CSI 300 +2.3%, and Japan’s Nikkei +3.5%).
Today we will learn in the Euro zone February’s final inflation. In the UK, the BoE will hold its meeting. Also we will learn in the US construction permits, housing starts, the Philadelphia Fed index, weekly jobless claims and February’s industrial output. In debt auctions: Spain (€ 5 Bn in bonds due 2025, 2028 and 2032) and France (€ 11.5 Bn in bonds due 2026, 2027, 2029 and I/L 2031, 2036 and 2053).

COMPANY NEWS

CIE AUTOMOTIVE, BUY
At yesterday’s closing bell the company announced a share buyback programme for up to 5% of the company’s capital worth € 150 M maximum. The plan is aimed at cancelling the shares acquired. The programme will have a one-year duration. Positive news, as it provide some support to the stock and at current prices (-30% below our T.P.) it would have a slight positive impact on our T.P. The programme would add +3.8% to EPS and assuming the programme’s maximum of € 150 M, it would imply a +1.6% increase to our T.P. Taking into account that CIE could acquire up to 25% maximum of the daily volume, this programme could end in 122 sessions if CIE speeds up or be delayed through the expiry where it would acquire ~12% of the average daily volume.