EUR 100.00 For Business Accounts Only

IBERIAN DAILY 15 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: MÁSMÓVIL, RESULTS HIGHLIGHTS.

MARKETS YESTERDAY AND TODAY

Profit taking in Europe, but with rallies at the opening bell today
The poor performance of US stock markets took its toll in Europe, with drops of more than -1%. In the Euro STOXX, the worst-performing sectors were Technology and Food, whereas Energy and Insurance were of the few closing with gains. On the macro side, in Germany July’s ZEW index showed expectations coming in below estimates and the current conditions component recovering much less than expected. June’s inflation confirmed the preliminary data. In Spain, June’s inflation also confirmed the preliminary data, although the core figure fell -0.1%. In the euro zone, May’s industrial output fell less than the previous month, but below expectations. Separately, the bank loan survey from the ECB showed that the region’s banks will toughen financing and credit conditions in the third quarter in view of the end of the state guarantees. On another note, the EU will review the countries’ deficit and debt limits, which will continue to be suspended until 2022. In the US, June’s inflation rose to 0.6% in the general figure and with the core figure remaining at 1.2%. In US business results, J.P. Morgan and Citigroup beat expectations (despite making record provisions due to the coronavirus), while Wells Fargo released worse earnings than expected.
What we expect for today
Stock markets would open with gains in view of the good prospects suggesting that a vaccine for Covid-19 might be ready ahead of expectations (following the success shown in the generation of antibodies in an initial test carried out by Moderna) and would neglect the new tensions between the US and China (after the order issued by D. Trump to penalise Chinese civil workers taking actions against H.Kong’s dissidents and later threats from China). Currently, S&P futures are up +0.85% (the S&P 500 was up +0.91% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 29.52%). Asian markets are trading with mixed results (Japan +1.45% and Hong Kong -0.5%).
Today in the UK we will learn July’s inflation and in the US May’s industrial output and the Fed’s Beige Book. In debt auctions: Germany (€ 5 Bn in 10Y bonds) and Portugal (€ 1.75 Bn in 6M and 12M t-bills). In US business results, Goldman Sachs and US Bancorp, among others, will release their earnings.


COMPANY NEWS

Results highlights next week.
Of the companies releasing 2Q’20 results in Spain next week, we expect to see a positive impact in Euskaltel, where we expect results to underscore the company’s defensive business profile in a quarter severely hit by the measures adopted to halt the impact from Covid-19. In this regard, EBITDA growth should continue (+3.1% vs. 2Q’19) with an increase in the client base thanks to the launch of Virgin (+0.4%). On the negative side, we stress Naturgy, even though the market is already forecasting poor results due to marketing, LNG and LatAm currencies, we believe there could be an additional implicit or explicit disappointment in guidance for the rest of the year (there is no official guidance for now).