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MARKETS YESTERDAY AND TODAY
ECB disappoints the market after leaving everything to fiscal policy
Lagarde’s appearance did not meet expectations, despite the measures announced, and stock markets ended up having another black Thursday. This disappointment came mainly on the capital side, where more flexibility was expected in the provision calendar, as well as in asset purchases, which came in below those of 2016 without extending to other assets such as financial debt or equity. Thus, the Banking sector fell the most in the Euro Stoxx followed by Insurance, with all sectors in the red once again. Consumer Goods and Pharma were the sectors falling the least. On the macro side, the Fed announced an extraordinary measure to inject US$ 1.5 Tn into the market in order to halt the panic on Wall Street triggered by the coronavirus. In the euro zone, January’s industrial output fell less than expected. In the US, February’s production prices grew less than expected. In Spain, the market watchdog has banned short positions on most stocks in the IBEX, as it has already accumulated the biggest drop in its history (-36.6% of losses over the past 3 weeks).
What we expect for today
The Fed’s intervention did not halt the drops, but the markets are rallying. Currently, S&P futures are down -0.8% (the S&P 500 ended -1% lower vs. its price at the closing bell in Europe). Volatility in the US rose to a new high (VIX 75.50%). Asian markets are sliding (Japan -6% and Hong Kong -3%).
Today in the US we will learn March’s U. of Michigan consumer confidence and February’s import prices.
COMPANY NEWS
CHANGES IBEX. Technical Advisory Committee to meet today in its first follow-up meeting of the year. We do not expect any changes.
The IBEX 35 Technical Advisory Committee will meet at today’s closing bell in its follow-up meeting (held in early March and September). Note that in these meetings, apart from weighting changes, there are normally no changes made to the composition (changes that are normally made in the June and December meetings). If any changes were to be made, the best-positioned stocks to be included would be Sacyr and Almirall (the latter would be more difficult due to its free float) and to be removed would be CIE and Mediaset (which is the stock that has lost the most volume awaiting the resolution of its merger with the Italian parent company).
BANKING SECTOR. ECB Disappointment Throttles Capital Relief.
The ECB has expanded its asset purchase programme by € 13 Bn, cut by -25bps the TLTRO III rate and activated an additional LTRO auction. On the banks side, it freed up regulatory capital (removing the -2.5% CCB and the P2G –not made public– from CET1, and pointing to article 104 CRDIV). This will give banks leeway to absorb NPLs. The measures announced today come up short, mainly on capital side (the key lay in greater flexibility in the provision calendar) and because the asset purchase programme is disappointing in quantity (far from the acquisition level in 2016) and quality of the assets (lack of other assets such as financial debt or equity). From this point on, coordinated and robust fiscal and regulatory actions will be needed. Meanwhile, although these measures will not act as a catalyst, they should not lead stock markets to fall.
The CNMV bans short positions, warning of more turbulent sessions ahead
The ban will be applied on the liquid stocks that fell by more than -10% yesterday, and the illiquid stocks that fell by -20%. That is, the ban would affect all of the stocks listed on the IBEX 35, save for Viscofan (-6.8% yesterday), Grifols (-9.3%), and Masmovil (-9.6%). As for the rest of stocks that are not listed on the IBEX 35, the ban on short positions will affect Abengoa class B, Aedas, Airbus, Aperam, Applus, Atresmedia, Audax, Biosearch, CAF, Coca-Cola, Codere, Dominion, Ercros, Euskaltel, Faes Farma, Fluidra, FCC, Gestamp, Grenergy, Grupo Catalana Occidente, San Jose, Lar, Liberbank, Logista, Metrovacesa, Naturhouse, NH Hoteles, OHL, Oryzon, Pharmamar, Prosegur, Renta Corporacion, Sacyr, Solaria, Talgo, Tecnicas Reunidas and Unicaja.
IBERIAN DAILY 13 MARCH (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: BAN ON SHORT POSITIONS, BANKING SECTOR, CHANGES IBEX.MARKETS YESTERDAY AND TODAY
ECB disappoints the market after leaving everything to fiscal policy
Lagarde’s appearance did not meet expectations, despite the measures announced, and stock markets ended up having another black Thursday. This disappointment came mainly on the capital side, where more flexibility was expected in the provision calendar, as well as in asset purchases, which came in below those of 2016 without extending to other assets such as financial debt or equity. Thus, the Banking sector fell the most in the Euro Stoxx followed by Insurance, with all sectors in the red once again. Consumer Goods and Pharma were the sectors falling the least. On the macro side, the Fed announced an extraordinary measure to inject US$ 1.5 Tn into the market in order to halt the panic on Wall Street triggered by the coronavirus. In the euro zone, January’s industrial output fell less than expected. In the US, February’s production prices grew less than expected. In Spain, the market watchdog has banned short positions on most stocks in the IBEX, as it has already accumulated the biggest drop in its history (-36.6% of losses over the past 3 weeks).
What we expect for today
The Fed’s intervention did not halt the drops, but the markets are rallying. Currently, S&P futures are down -0.8% (the S&P 500 ended -1% lower vs. its price at the closing bell in Europe). Volatility in the US rose to a new high (VIX 75.50%). Asian markets are sliding (Japan -6% and Hong Kong -3%).
Today in the US we will learn March’s U. of Michigan consumer confidence and February’s import prices.
COMPANY NEWS
CHANGES IBEX. Technical Advisory Committee to meet today in its first follow-up meeting of the year. We do not expect any changes.
The IBEX 35 Technical Advisory Committee will meet at today’s closing bell in its follow-up meeting (held in early March and September). Note that in these meetings, apart from weighting changes, there are normally no changes made to the composition (changes that are normally made in the June and December meetings). If any changes were to be made, the best-positioned stocks to be included would be Sacyr and Almirall (the latter would be more difficult due to its free float) and to be removed would be CIE and Mediaset (which is the stock that has lost the most volume awaiting the resolution of its merger with the Italian parent company).
BANKING SECTOR. ECB Disappointment Throttles Capital Relief.
The ECB has expanded its asset purchase programme by € 13 Bn, cut by -25bps the TLTRO III rate and activated an additional LTRO auction. On the banks side, it freed up regulatory capital (removing the -2.5% CCB and the P2G –not made public– from CET1, and pointing to article 104 CRDIV). This will give banks leeway to absorb NPLs. The measures announced today come up short, mainly on capital side (the key lay in greater flexibility in the provision calendar) and because the asset purchase programme is disappointing in quantity (far from the acquisition level in 2016) and quality of the assets (lack of other assets such as financial debt or equity). From this point on, coordinated and robust fiscal and regulatory actions will be needed. Meanwhile, although these measures will not act as a catalyst, they should not lead stock markets to fall.
The CNMV bans short positions, warning of more turbulent sessions ahead
The ban will be applied on the liquid stocks that fell by more than -10% yesterday, and the illiquid stocks that fell by -20%. That is, the ban would affect all of the stocks listed on the IBEX 35, save for Viscofan (-6.8% yesterday), Grifols (-9.3%), and Masmovil (-9.6%). As for the rest of stocks that are not listed on the IBEX 35, the ban on short positions will affect Abengoa class B, Aedas, Airbus, Aperam, Applus, Atresmedia, Audax, Biosearch, CAF, Coca-Cola, Codere, Dominion, Ercros, Euskaltel, Faes Farma, Fluidra, FCC, Gestamp, Grenergy, Grupo Catalana Occidente, San Jose, Lar, Liberbank, Logista, Metrovacesa, Naturhouse, NH Hoteles, OHL, Oryzon, Pharmamar, Prosegur, Renta Corporacion, Sacyr, Solaria, Talgo, Tecnicas Reunidas and Unicaja.
Provider
Sabadell
Research Department
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