EUR 100.00 For Business Accounts Only

IBERIAN DAILY 30 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: LIBERBANK, OHL, REPSOL, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

Levels consolidating ahead of US presidential debate
Slight profit taking on both sides of the Atlantic after the previous day’s gains, and after it was learned that the official number of dead from Covid-19 exceeded one million. On the US market, the outperformance of tech firms and pharma companies tried to offset the losses in financial and energy stocks, with the stock market eagerly awaiting the first chaotic and embarrassing presidential debate, which saw Biden named the winner according to the initial polls. Meanwhile, optimism continued to reign in Europe regarding an agreement with the UK after the EU stated it was ready to work on a legal framework. Thus, in the Euro STOXX, Utilities and Consumer Goods were the sectors that rose the most, with Banks and Travel & Leisure falling the farthest. In the euro zone, the economic confidence index was higher than expected, backing the expected recovery in the euro zone, whereas inflation remained in negative territory in September in Germany (-0.2% YoY vs. 0.0% previously) and in Spain (-0.4% YoY vs. -0.5% previously). As for Covid-19, the Govt. of Madrid and the Ministry of Health reached an agreement that could be ratified today (and extended to the rest of the country) that would mean the imposition of mobility restrictions on municipalities with a population of over 100,000, a rate of infection higher than 500 over a two-week period, more than 10% of positive PCR test results and where Covid-19 patients occupy 35% of beds in intensive care units. From the Fed, P. Harker took a cautious stance, warning that employment will take at least 3 years to recover, whereas Williams was optimistic, expecting a drop of only -3.0% in the 2020 GDP, which cannot be ruled out bearing in mind the much larger rise than expected in September’s consumer confidence and if the Democrats are able to get their US$ 2.2 Tn stimulus plan approved. In China, the manufacturing and services PMIs climbed above expectations in September.
What we expect for today
Stock markets would open with drops of -0.5% in view of the higher electoral uncertainty in the US and despite the good reaction of older patients to Moderna’s vaccine. Currently, S&P futures are down -0.6% (the S&P 500 ended largely flat vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 26.27). Asian markets are trading with mixed results (Japan -1% and Hong Kong +1.2%).
Today in the euro zone C. Lagarde will give a conference and we will learn September’s inflation, in the UK the final 2Q’20 GDP and in Germany September’s number of unemployed. Debt auctions: Greece (€ 375 M in 6M t-bills) and Germany (€ 4 Bn in bonds due 2025).