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Chinese trade deflates and drags down Europe
In a session full of relevant macro data releases, European stock markets once again fell slightly, bringing the IBEX back below 12,000 points. In the STOXX 600, the best-performing sectors were Autos and Travel & Leisure, with Telecoms (for the second straight day) and Consumer Goods falling the most. On the macro side, in Germany, November’s final inflation confirmed the preliminary data of 2.2% YoY. In Brazil, inflation rose slightly more than expected to 4.87% YoY. In the US, November’s SME confidence (NFIB) rose sharply to a high since June’21, with the election result a sign of a change in economic policy. The rise in 3Q’24 unit labour costs was cut despite the fact that growth in productivity remained the same.
In currencies, the euro fell to 1.0500 (currently at 1.0526). In raw materials, Brent crude futures rose from US$ 71.62/barrel to an intraday high of US$ 72.70 (currently at US$ 72.64/barrel). Gold moved within a sideways range of US$ 2,658-2,695/oz (currently at US$ 2,696/oz).
In fixed income, the German 2Y/10Y debt curve steepened to +16bps after November’s inflation was in line with expectations, and awaiting the ECB meeting (-25bps rate cut expected). In the US, the 10Y bond yield rose to 4.23%. In credit derivatives, both the Xover and CDX HY$ traded at 292bps (close to 2024 lows).
What we expect for today
Stock markets would open flat with some bearish slant that should improve, awaiting the US inflation data. Currently, S&P futures are up +0.12% (the S&P 500 was down -0.28% vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -0.17%, Japan’s Nikkei -0.02%).
Today in the US we will learn November’s inflation, and in Brazil the Central Bank will meet. In Germany, the chancellor O. Scholz will officially request a vote of confidence on the 16th of December.
COMPANY NEWS
INDITEX. 3Q’24 Results below expectations due to pressure in gross margin but its 2024 targets remain unchanged. OVERWEIGHT.
3Q’24 LfL sales came in slightly below expectations (~+11% vs. ~+11.5% BS(e) and ~+12% consensus) with a negative exchange rate of ~-4%. Gross margin was under pressure, sliding around -23bps on the quarter to 61.55% (vs. +10bps BS(e) and around +8bps consensus), whereas operating costs remained under control (+7.3% vs. 3Q’23), although slightly above sales growth (+6.8%). This means € 2.13 Bn of EBIT (+5.1% vs. +12.1% BS(e) and +12.0% consensus). The 4Q’24 sales growth guidance (1 Nov-9 Dec) remained near double-digit levels (+9%), with the company maintaining its 2024 targets (stable gross margin at +/-50bps and -3% negative FX). We expect a negative market reaction, with the share price having climbed around +39% in 2024 (+19% vs. Ibex 35).
IBERIAN DAILY 11 DECEMBER (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: INDITEX.Chinese trade deflates and drags down Europe
In a session full of relevant macro data releases, European stock markets once again fell slightly, bringing the IBEX back below 12,000 points. In the STOXX 600, the best-performing sectors were Autos and Travel & Leisure, with Telecoms (for the second straight day) and Consumer Goods falling the most. On the macro side, in Germany, November’s final inflation confirmed the preliminary data of 2.2% YoY. In Brazil, inflation rose slightly more than expected to 4.87% YoY. In the US, November’s SME confidence (NFIB) rose sharply to a high since June’21, with the election result a sign of a change in economic policy. The rise in 3Q’24 unit labour costs was cut despite the fact that growth in productivity remained the same.
In currencies, the euro fell to 1.0500 (currently at 1.0526). In raw materials, Brent crude futures rose from US$ 71.62/barrel to an intraday high of US$ 72.70 (currently at US$ 72.64/barrel). Gold moved within a sideways range of US$ 2,658-2,695/oz (currently at US$ 2,696/oz).
In fixed income, the German 2Y/10Y debt curve steepened to +16bps after November’s inflation was in line with expectations, and awaiting the ECB meeting (-25bps rate cut expected). In the US, the 10Y bond yield rose to 4.23%. In credit derivatives, both the Xover and CDX HY$ traded at 292bps (close to 2024 lows).
What we expect for today
Stock markets would open flat with some bearish slant that should improve, awaiting the US inflation data. Currently, S&P futures are up +0.12% (the S&P 500 was down -0.28% vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -0.17%, Japan’s Nikkei -0.02%).
Today in the US we will learn November’s inflation, and in Brazil the Central Bank will meet. In Germany, the chancellor O. Scholz will officially request a vote of confidence on the 16th of December.
COMPANY NEWS
INDITEX. 3Q’24 Results below expectations due to pressure in gross margin but its 2024 targets remain unchanged. OVERWEIGHT.
3Q’24 LfL sales came in slightly below expectations (~+11% vs. ~+11.5% BS(e) and ~+12% consensus) with a negative exchange rate of ~-4%. Gross margin was under pressure, sliding around -23bps on the quarter to 61.55% (vs. +10bps BS(e) and around +8bps consensus), whereas operating costs remained under control (+7.3% vs. 3Q’23), although slightly above sales growth (+6.8%). This means € 2.13 Bn of EBIT (+5.1% vs. +12.1% BS(e) and +12.0% consensus). The 4Q’24 sales growth guidance (1 Nov-9 Dec) remained near double-digit levels (+9%), with the company maintaining its 2024 targets (stable gross margin at +/-50bps and -3% negative FX). We expect a negative market reaction, with the share price having climbed around +39% in 2024 (+19% vs. Ibex 35).
Underlying
Inditex (ITX SM)
Provider
Sabadell
Research Department
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