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IBERIAN DAILY 07 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: INDITEX, MERLIN PROPERTIES.

Risk aversion aggravates in European stock markets
The fear of a greater intensification of Russia’s attacks following the bombing of Europe’s largest nuclear power station in Ukraine led to a black session on Friday for stock markets, which closed with losses of around -5.0%, with the USD and sovereign bond yields as safe-haven assets (the euro hit two-year lows). Thus, it was a week of high volatility in Europe, in which the Euro STOXX fell by almost -10% (vs. -2.2% for the S&P 500), with all sectors ending with losses, led by Bands and Autos vs. the smallest drops of Media and Household Goods. On the macro side, in the Euro zone, January’s retail sales recovered less than expected. In the US, non-farm job creation came in above expectations, the unemployment rate fell more than expected and wage returns slowed unexpectedly. In China, the government is studying a 5.5% GDP growth target’22 vs. 5.1% expected by the consensus and 8.1% in 2021 with lower fiscal deficit (-2.8%) although with a +7% rise in defence spending. On the geopolitical front, the US is in talks with the EU to veto crude oil imports from Russia, which would push crude oil and prices still higher whereas the third round of talks between Ukraine and Russia is expected today.
What we expect for today
European stock markets would open with losses of around -2.0%, with better performance from the oil sector and alternative energies. Currently, S&P futures are down -1.14% (yesterday the S&P 500 ended up +0.73% vs. the European closing bell). Volatility in the US rose (VIX 31.98). Asian markets are falling (China’s CSI 300 -3.1%, and Japan’s Nikkei -2.94%).
Today we will learn in the Euro zone March’s Sentix confidence index, in Germany January’s factory orders and in Mexico February’s consumer confidence. In debt auctions: Germany (€ 6 Bn in 3M & 9M T-bills) and France (€ 5.4 Bn in 3M, 6M & 12M T-bills).