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IBERIAN DAILY 19 AUGUST (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: IAG, MÁSMÓVIL.

MARKETS YESTERDAY AND TODAY

European markets unable to post gains while US markets hit highs
The session followed a downward slope, with European markets ending in the red, led by the drops in the UK, and while the US hit new highs thanks to tech companies. In the Euro STOXX, the only sectors with gains were Travel & Leisure and Insurance, with Real Estate and Energy leading the drops. On the macro side, in the US housing starts rose far above expectations in July, as did building permits. Separately, this week negotiations would resume between Democrats and Republicans for a new fiscal package expected to reach US$ 1.5 Tn. Meanwhile, Trump cancelled the review of Phase I of the agreement with China. In Chile, the 2Q’20 GDP contracted in line with expectations (-14.10% YoY vs. 0.4% previously). In the euro zone, the Vice President of the ECB, Luis de Guindos, encouraged governments to maintain the loan guarantee system. In Spain, according to the BoS public debt now stands at € 1.29 Tn, which would represent around 110% of GDP and is on course to reach 120% by the year-end. In Japan July’s trade deficit was lower than expected, with both exports and imports falling less than expected. In US business results, Walmart, Home Depot and Advance Auto easily beat expectations.
What we expect for today
European markets would open with slight gains, boosted by the new high hit by the S&P 500, led by technology and high-quality cyclical sectors. Currently, S&P futures are up +0.15% (the S&P 500 ended up +0.1% vs. its price at the closing bell in Europe). Volatility in the US was practically unchanged (VIX 21.5%). Asian markets are trading with mixed results (Japan +0.3% and Hong Kong -0.1%).
Today in the UK and euro zone we will learn July’s inflation and in the US the Fed’s meeting minutes. There will also be an OPEC panel meeting. In debt auctions: Germany (€ 1.5 Bn in bonds due 2050) and Portugal (90D and 329D t-bills). In US business results, NVIDIA, Lowe’s and Analog Devices, among other, will release their earnings.