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IBERIAN DAILY 06 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ANTI-TOB RD, BBVA, ELECTRICITY SECTOR, IBERDROLA, NATURGY, OHLA, SACYR.

Central Banks push stock markets downward
European stock markets fell ahead of the release of the Fed meeting minutes, amid uncertainty on recovery in China and the prospect of new interest rate hikes. In the Euro STOXX, the best-performing sectors were Autos and Pharma, with Insurance and Utilities the worst performers over the session. On the macro side, in the euro zone June’s final services PMI fell more than expected due to the worse performance by peripheral nations. From the ECB, Visco was more cautious on the upcoming rate hikes, leaving the door open to other ways of slowing inflation. In Spain, May’s industrial output fell slightly less than expected. In the US, the Fed’s meeting minutes showed more division than expected, and although the decision to wait was unanimous, some members would have supported another +25bps hike. Moreover, the majority believes that such a tight labour market and inflation still far from the 2% target leaves the door open to new hikes in the short term. Separately, factory orders rose less than expected, while durable goods orders improved on the preliminary data. In the OPEC+ meeting, the Saudi energy minister supported cooperation in the group to underpin prices, although the market could be expecting bigger cuts.
What we expect for today
European stock markets would open with losses due to the additional signs of tension from the Fed, the conflict between US and China (Yellen will visit the country today) and the poor readings of the leading indicators. We expect better performance from defensive stocks over cyclical ones. Currently, S&P futures are down -0.36% (the S&P 500 was unchanged vs. the European closing bell). Volatility in the US rose (VIX 14.19). Asian stock markets are sliding (China’s CSI 300 -0.60%, Japan’s Nikkei -1.64%).
Today in Germany we will learn May’s factory orders, in the euro zone May’s retail sales and in the US weekly jobless claims, June’s ADP private employment survey, May’s trade balance and June’s non-manufacturing ISM. In Mexico, the BoM meeting minutes. In debt auctions: Spain (€ 6.5 Bn in I/L bonds due 2027, 2029, 2033 and 2071).