EUR 100.00 For Business Accounts Only

IBERIAN DAILY 01 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: MÁSMÓVIL, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY


Markets rise on the euro’s depreciation
The depreciation of the euro, which fell below the support level at 1.09 dollars, boosted European markets, which ended with gains of more than +0.5%. In the Euro Stoxx, all the sectors posted gains, with Construction and Utilities leading the way vs. the worse performance from Telecoms and Technology. On the macro side, in Spain the 2Q’19 GDP was cut -0.3% (more than expected) due to stagnating consumption. September’s inflation fell to 0.1% YoY, standing at its lowest level since Aug’16. Separately, public debt came in at 99% of GDP, far from the Government’s target of 95.8%. In Germany, the number of unemployed fell unexpectedly in September and inflation fell more than expected to 1.2%. In the euro zone, the unemployment rate fell -0.1% unexpectedly, standing at 7.4%. From the ECB, Mario Draghi reiterated that all instruments are open to being recalibrated. In the UK, the final 2Q’19 GDP was raised by +0.1%. In the US, the Dallas Fed activity index fell slightly less than expected. From the Fed, C. Evans believes that the institution has done enough, despite the fact that the weakness of the US economy is growing. As for the trade war, Trump again showed his desire to force a trade agreement with China, whereas P. Navarro did not rule out imposing tariffs on the EU. In Japan, the unemployment rate beat expectations, remaining at 2.2% in August, whereas the Tankan index fell less than expected in 3Q’19.
What we expect for today
European markets would rise less than +0.5%, with the Euro Stoxx approaching annual highs. Currently, S&P futures are up +0.47% (the S&P 500 closed practically unchanged vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 16.24%). The Asian markets that are open are rising (Japan +0.69%).
Today in the euro zone we will learn September’s final manufacturing PMI and preliminary inflation and in the US September’s manufacturing ISM and ADP employment.


COMPANY NEWS

MÁSMÓVIL. New agreement with Orange (mobile & FttH network) & guidance upgrade. BUY.
The company has announced it has closed a new agreement with ORA for both the mobile (improvement of its NRA agreement, including 5G and extending it through 2028/2033) and FttH network (including additional 5.2 M UUII) and that it will generate € 40 M of OPEX savings (3.2% total). The group has also raised its EBITDA guidance for both 2019 (+3.3% and +3% vs. BS(e) and consensus) and for 2020 (+8.3% and+6.1% vs. BS(e) and consensus), and new estimates for 2021 of € 670/700 M (+15% vs. BS(e) and+11.5% vs. consensus). The company upgraded its CAPEX estimate by € 180 M for 2019/21 (€ 97 M in 2019) and kept its deleveraging forecast at around 3x NFD/EBITDA in 2020 and