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IBERIAN DAILY 20 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FCC, TELEFÓNICA.

Gains return to the Ibex and Europe
Following Monday’s doubts, the bullish pattern continued in Europe in a session of new tightening of sovereign debt despite the strong recovery of the residential sector data in the US. In the STOXX 600, most sectors ended with gains, led by Travel&Leisure and Basic Resources vs. Automobiles, Telecoms, Food and Energy that were the only segments ending in negative territory. On the macro side, in the euro zone, November’s final inflation confirmed the preliminary general (2.6% YoY) and core (3.6% YoY) data. On another note, the Eurozone Ministers would be about to close a fiscal agreement before the end of the year. In Spain, the BoS cut its 2024-25 GDP forecast to 1.6% and 1.9% from 1.8% and 2.0% previously. In the US, November’s housing starts climbed more than expected (the highest level since May), whereas construction permits dropped in line with expectations. From the Fed, R. Bostic was in favour of 2 rate cuts at the end of 2024, whereas A. Goolsbee warned that the market has gone too far with the expected cuts. In China, the PBoC kept the 1 and 5Y mortgage rates unchanged, as expected, at 3.4% and 4.2%, respectively.
What we expect for today
European stock markets would open flat with some bullish bias. Currently, S&P futures are up +0.03% (the S&P 500 ended +0.21% higher vs. the European closing bell). Volatility in the US rose (VIX 12.53). Asian stock markets are mixed (China’s CSI 300 -0.68%, Japan’s Nikkei +1.37%).
Today in the euro zone we will learn December’s consumer confidence, in the UK November’s inflation, in the US December’s Conference Board confidence and November’s existing home sales and in Mexico October’s retail sales.


COMPANY NEWS

TELEFÓNICA. SEPI becomes the largest shareholder with 10% of the capital. BUY
At yesterday’s closing bell the Spanish government communicated that SEPI (Spanish state holding company) will acquire up to 10% of the company’s capital (around € 2 Bn, 575 M shares), becoming the main shareholder after STC (9.9%), BBVA (4.84%) and Criteria-Caixa (6%), which back this decision. SEPI will carry out the acquisition minimising the impact on the share price (assuming the full acquisition of the stake on the open market means 6/7 trading months BS(e)). The incorporation is justified by TEF’s strategic profile, which has confirmed it will continue to execute its strategic plan. We expect a positive share price reaction (yesterday the ADR climbed +6%) and SEPI’s incorporation to solve the shareholding doubts after STC’s arrival. On the negative side, this entails a public majority stake once more.