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IBERIAN DAILY 30 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: FERROVIAL, REPSOL.

MARKETS YESTERDAY AND TODAY

News on the trade war front
Confirmation that China has resumed talks with the US and bets on going ahead with the negotiations in Washington in September led stock markets to rally. Thus, within the Euro STOXX, the best-performing sectors were Basic Resources and Construction, whereas only Real Estate saw losses and Utilities ended up with the smallest gains. On the macro side, in Spain, August’s preliminary inflation figure slowed to September’16 lows due to the drop in energy prices. In Germany, unemployment increased in line with expectations and August’s preliminary inflation fell more than expected. In the Euro zone, the economic climate index for August improved unexpectedly. From the ECB, K. Knot cooled off market expectations regarding September’s meeting, as he sees no need to resume the QE programme. In the United Kingdom, opposition parties and part of the conservative MPs against Brexit will join efforts to ask for a new extension on 31 October in order to prevent a no-deal exit. In the US, the second reading of the 2Q’19 GDP was lowered by a tenth (2.0% QoQ annualised) despite the increase in private consumption, which remains the main driver for activity. Weekly jobless claims increased slightly more than expected and pending home sales fell in July to levels below expectations. From the political front, D. Trump conveyed an upbeat message, revealing trade talks with China on Thursday. In Brazil, the 2Q’19 GDP grew more than expected to 1.0% YoY. Separately, US attorneys have proved new technology thefts by Huawei. In Japan, industrial output climbed above expectations, whereas retail sales came in below expectations, falling notably in July.
What we expect for today
The current momentum will lead to a slightly positive opening.
Currently, S&P futures are up +0.15% (the S&P 500 closed largely unchanged vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 17.88%). The Asian markets that are open are rising (Hong Kong +0.73% and Japan +1.31%).
Today we will learn: in Germany and Spain, retail sales for July; in the Euro zone, August’s inflation; in the US, July’s personal outlays and the University of Michigan’s final consumer confidence for August.