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IBERIAN DAILY 22 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ENDESA, ELECTRICITY SECTOR.


The market confirms recovery
The European stock markets posted gains once again thanks to the possibility of the US avoiding recession, as J. Powell pointed out. Thus, the Euro STOXX recovered driven by Chemicals and Technology, whereas Utilities and Pharma were the day’s worst performers. On the macro side, European Commission President Ursula von der Leyen insisted on the need to invest in renewable energies to reduce energy dependence. In Spain, PM Pedro Sánchez is preparing an anti-crisis package that could include a tax rise for the large electricity companies although apparently from 2023 (Unidas Podemos bets on a 10bps rise in the corporate tax). In Germany, the Finance Minister opposed the EU’s ban on combustion car sales starting in 2035. On another note, the IEA warned Europe it should be prepared for a total cut in gas supply in the winter, adopting contingent measures such as the extension of the use of nuclear power plants and/or reduce demand. In the US, the Chicago Fed index fell unexpectedly in May, and second-hand home sales contracted somewhat below expectations in May.
What we expect for today
Growth fears return, with sharp drops in Brent prices that will drag down the oil sector, and the European stock markets would open with losses of -1.0%, with a better performance of defensive stocks and with all eyes on J. Powell’s speech. Currently, S&P futures are down -0.9% (the S&P 500 ended unchanged vs. the European closing bell). Volatility in the US fell (VIX 30.19). Asian markets are mixed (China’s CSI 300 -0.35% and Japan’s Nikkei +0.1%).
Today in the US, J. Powell will give his first speech before Congress. Also we will learn in the United Kingdom May’s inflation data, and in the Euro zone June’s consumer confidence. In debt auctions: Germany (€ 1.5 Bn in bonds due 2038).