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IBERIAN DAILY 11 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CHANGES IBEX 35, INDITEX, SACYR.

Flat stock markets
Stock markets remained calm, awaiting relevant macroeconomic data (May’s inflation will be released today in the US) or newsflow on the negotiations with China. In the STOXX 600, the best-performing sectors were Autos and Energy, whereas Banks and Financial Services ended with the biggest drops. On the macro side, in the euro zone, June’s Sentix index climbed more than expected to the highest level in one year, also providing the first positive reading in 2025. In the US, the NFIB SMEs confidence rose more than expected, putting an end to the negative performance of 4 consecutive months thanks to the better expectations in both sales and financial conditions. On another note, S. Bessent (Treasury Secreatary) is being considered as a candidate to replace J. Powell (Fed chairman). Awaiting the approval of D. Trump and Xi Jinping, the US and China have reached a framework agreement on tariffs in Geneva, easing the control of technology and rare mineral exports, respectively. Furthermore, the US and Mexico could be about to agree a reduction of tariffs on steel and curb imports. The Appeals Court will allow in the end the extension of tariffs at least until the 31th of July. In Brazil, May’s inflation moderated slightly more than expected to 5.3% YoY.
What we expect for today
European stock markets would open with losses of around -0.3%, despite the progress in trade negotiations and awaiting the US inflation data. Currently, S&P futures are down -0.3% (the S&P 500 ended +0.3% higher vs. the European closing bell). Asian markets are climbing (China’s CSI 300 +0.9% and Japan’s Nikkei +0.5%).
Today in the US we will learn May’s inflation and in Mexico April’s industrial output.


COMPANY NEWS

INDITEX. 1Q’25 results hit by FX and continuity in the trading update. OVERWEIGHT
The 1Q’25 sales were hit by an FX effect (-2.7%), although on the LfL level (adjusted for the calendar effect; -1.1%) they were in line (+5.3%), meaning acceleration of the growth pace in the second half of the quarter to around +6%. The gross margin remained stable at ~69.6% (-5bps), as expected, whereas costs, although under control, grew slightly at a faster pace than sales (+2.3%). This means EBIT reached € 1.64 Bn (+0.3% vs. 1Q’24 and -25bps in EBIT margin to 19.8%; in line with BS(e) and 19.7% consensus). Indications for 2Q’25 sales growth (01 May – 09 June) show no surprises, rising +6% and confirming the target’25 of a stable gross margin (±50bps vs. 2024; BS(e) and consensus in line), although the negative FX effect was raised to -3% (vs. -1% previously). We do not expect a significant impact.