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IBERIAN DAILY 25 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CIE AUTOMOTIVE, REPSOL.

New sanctions against Russia
The European stock exchanges ended virtually flat in a session of greater widening in debt yields after NATO warned Russia against the use of chemical weapons. Separately, the US announced a new package of sanctions against Russian elites, lawmakers and defence companies. Europe has ruled out banning imports on Russian oil (although it has requested more oil from OPEC), although the US has offered to supply gas in order to reduce Europe’s dependence on Russia, and to this end it will increase supply by an additional 15 bcm annually through the end of 2022 (the problem continues to lie in the fact that supply from Russia accounts for 50 bcm/year). With this in mind, the best-performing sectors within the Euro STOXX were Basic Resources and Telecoms vs. the drops led by Retail and Travel & Leisure. As for macro data, in the Euro zone, March’s preliminary manufacturing and services PMIs fell less than expected, although the rest of indicators continue to hint at a significant slowdown in the economic cycle in 2Q’22. In the US, weekly jobless claims contracted sharply, whereas February’s preliminary goods orders fell unexpectedly. The core component of capital goods orders points to a decline in goods investment in 2Q’22. From the Fed, C. Evans was comfortable with rates hikes of 0.25bps, although he left the door open to greater tightening if necessary. In Mexico, the BoM raised rates by +0.5pp to 6.5% in order to fight inflation (the decision was announced by L. Obrador before his speech).
What we expect for today
We expect a slightly bullish opening following the drops of the Chinese technology sector (in view of the statements outlining it is too soon to predict an agreement in order not to exclude Chinese companies from US stock exchanges) and with all eyes on warnings levelled at Russia regarding chemical weapons and the fear in the EU that China will increase its chip supply to Russia. Currently, S&P futures are up +0.2% (yesterday the S&P 500 ended +0.42% higher vs. the European closing bell). Volatility in the US dropped (VIX 21.67). Asian markets are mixed (China’s CSI 300 -1.43%, and Japan’s Nikkei +0.15%).
Today we will learn in Spain the final 4Q’21 GDP, in the Euro zone February’s M3, in Germany March’s IFO, in Mexico January’s IGAE economic activity index, and in the US February’s pending home sales. In debt auctions: Italy (€ 3.5 Bn in bonds due 2023 and I/L bonds due 2032).