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IBERIAN DAILY 06 APRIL (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: INDITEX, UNICAJA.

The cycle shows exhaustion signs
European stock markets dropped following the signs that the US slowdown will hit the job market. Thus, in the Euro STOXX, defensive sectors outperformed cyclicals, led by Telecoms and Pharma vs. Automobiles and Real Estate that saw the biggest drops. On the macro side, in Germany, factory orders speeded up significantly in February. In Spain, February’s industrial output slowed down unexpectedly. Separately, Spain’s Independent Authority for Fiscal Responsibility (AIReF) foresees a deviation to 4.2% in the deficit targets for 2023 and debt at 110.6% of GDP at the end of 2023. In the euro zone, March’s final services PMI was cut from the preliminary data, showing an uneven recovery among the regions. In the US, March’s ADP private employment survey reported lower job creation than expected whereas the trade balance saw an increase in deficit in February. Lastly, March’s non-manufacturing ISM fell sharply and more than expected, with significant drops in new orders and employment. From the Fed, L. Mester showed doubts about the institution’s decision in May although he reiterated the message of raising rates and keep them at high levels. In China, Caixin services PMI rose unexpectedly.
What we expect for today
European stock markets would open with slight drops in a session lacking drivers, awaiting the US job data to be released tomorrow. We continue to expect defensive companies to outperform cyclicals. Currently, S&P futures are down -0.29% (the S&P 500 ended +0.2% higher vs. the European closing bell). Volatility in the US rose (VIX 20.73). Asian markets are sliding (China -0.24% and Japan’s Nikkei -1.3%).
Today in the US we will learn weekly jobless claims.