EUR 100.00 For Business Accounts Only

IBERIAN DAILY 13 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FERROVIAL, IAG.

MARKETS YESTERDAY AND TODAY

A week of recovery across Europe
European stock markets ended with gains after the Omicron Covid variant was shown to be less alarming than initially thought. By contrast, the rising inflation and disappointing industrial output data were concerning ahead of Central Bank meetings in December. With all this in mind, within the Euro STOXX all the sectors rallied, with the biggest weekly gains coming in Travel & Leisure and Autos (two of the hardest hit sectors by the pandemic), whereas Household Goods and Real Estate were the worst relative performers. On the macro side, in Germany November’s final inflation confirmed the preliminary data. In Spain, October’s industrial output slowed down significantly while in the UK it also slowed down unexpectedly. On another note, the PM B. Johnson warned that the country is facing a wave of infections due to the Omicron variant and he plans to speed up the vaccination process before the end of the year. In the UK, October’s industrial output slowed unexpectedly, whereas in Spain it contracted sharply. In the US, November’s inflation rose to 6.8%, with the core figure rising to 4.9% (in line with expectations). On the whole, the data supports the Fed’s tougher stance and the idea of tapering speeding up during 1Q’22 (vs. the pace of € -15 Bn monthly initially planned, meaning that the programme would end in June’22). The most moderate wing of the Democrat party would be adding pressure on the Fed to take more specific actions before the midterm’22. Lastly, December’s preliminary University of Michigan consumer confidence rose more than expected. G7 warned Russia about the huge consequences from an attack to Ukraine. In China, the PBoC announced at the Central Economic Work Conference it will focus on stabilising the economy and keeping growth within a reasonable range for 2022, characterised by a cautious monetary policy and proactive fiscal policy. These comments have increased consensus expectations of seeing a fiscal stimulus plan at the beginning of 2022.
What we expect for today
European stock markets would see a bullish opening, underpinned by stimulus expectations in China and the rise in raw material prices. Currently, S&P futures are up +0.35% (the S&P 500 ended +0.43% higher on Friday vs. its level at the European closing bell). Volatility in the US fell (VIX 18.69. Asian markets are rising (China’s CSI 300 +0.7% and Japan’s Nikkei +0.75%).
Today there are no noteworthy macro releases. In debt auctions: Germany (€ 6 Bn in 5M and 12M t-bills), Netherlands (€ 3 Bn in 1M, 3M and 6M t-bills) and France (€ 5.4 Bn in 3M, 6M and 12M t-bills).