EUR 100.00 For Business Accounts Only

IBERIAN DAILY 02 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, FERROVIAL, GRIFOLS, REPSOL.

MARKETS YESTERDAY AND TODAY

Weekly drops despite the good GDP data
Most European stock markets saw drops last week (with the exception of France’s CAC that rose around +1%), with the Ibex seeing a poor week and month, being the only main index ending the month with losses. Thus, in the Euro STOXX, Basic Resources and Banks were the best-performing sectors whereas Travel&Leisure and Utilities were the worst performers. On the macroeconomic level, in the euro zone, the 2Q’21 GDP climbed above expectations to 13.7% YoY, June’s unemployment rate fell to 7.7% from 7.9% previously and expected and July’s inflation climbed to 2.2% YoY. In Spain, the 2Q’21 GDP rose to 19.8% YoY, almost +1% vs. expectations. In the US, the employment cost index fell more than expected. In China, Caixin manufacturing PMI dropped more than expected, barely remaining in expansive territory. In US results, Linde, Caterpillar, Procter&Gamble and Exxon Mobile beat expectations.
What we expect for today
European stock markets would open with gains of +0.5%, driven by the expectation that the increasing number of cases in China and the worse macroeconomic data result in some monetary easing and greater regulatory stability (following the recent measures adopted against the technology and education sectors). Currently, S&P futures are up +0.5% (the S&P 500 ended flat vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 18.24). Asian markets are climbing (China’s CSI +2% and Japan’s Nikkei +1.9%).
Today in the euro zone and Germany we will learn July’s final manufacturing PMI, in Spain July’s final manufacturing PMI and, in the US July’s manufacturing ISM. As for auctions, Germany will issue €6 Bn in 3 & 9M-T-Bills and Holland € 2 Bn in 6M T-bills and France € 5.4 Bn in 3, 6 & 12M T-bills In US business results, Loews, Pioneer and Global Payments among others, will release their earnings.


COMPANY NEWS

BANKING SECTOR. STRESS TEST.
The stress tests of the banking sector made public last Friday to 50 banks (70% of total assets in the European banking sector) ended with a -485bps squeeze in the adverse scenario of 2023 FL CET1 from -10.2% on average’20. In our coverage universe, with the exception of Société Générale, the ratio remains >8%. Bankinter, along with Santander, obtained the best result (-104bps and -258bps, respectively and vs. -450bps on average in the rest of our coverage universe). Additionally, Bankinter shows the highest final FL CET’21 level (11.25%), followed by ING Groep (10.99%) and Intesa SanPaolo (9.39%) vs. 9.31% for Santander and 7.54% for Société Générale. As in the base-case scenario (economic recovery) all banks generate capital, there are no indications suggesting specific restrictions in dividend payments.