EUR 100.00 For Business Accounts Only

IBERIAN DAILY 20 AUGUST (ANÁLISIS BANCO SABADELL)

MARKETS YESTERDAY AND TODAY

Promising start to the week
Stock markets started the week with gains higher than +1.0% on rising expectations of monetary stimuli on both sides of the Atlantic and fiscal stimuli in Germany. Within the Euro STOXX, Basic Resources and Energy led gains, whereas Banks and Real Estate saw the smallest increases. On the macro side, in the Euro zone, July’s inflation was lowered unexpectedly to 1.0% YoY from 1.1% previously. In Germany, the Bundesbank warned that the economy might fall into a technical recession in 3Q’19, whereas part of Merkel’s government admitted that stimulus measures will be implemented only in the event of notable recession. In Italy, the 5-Star Movement could reach an agreement with the PD, displacing Salvini. In the US, E. Rosengren (from the Boston Fed) spoke against cutting rates further, conditioning rate cuts on a greater deterioration of the US economy, whereas Trump defended rate cuts of 100bps. In US business results, Estee Lauder released better results than expected.
What we expect for today
Stock markets might pause for a break following the gains of the past 2 sessions.
Currently, S&P futures are up +0.1% (the S&P 500 closed -0.1% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 16.9%). Asian markets are rising slightly (Japan +0.5% and Hong Kong +0.0%).
Today there will be no relevant macro references. In Italy, Conte will give a speech before the Senate. In US business results, Home Depot will release its earnings.


COMPANY NEWS

MÁSMÓVIL, BUY
According to Expansion, MAS negotiates with ORA a new global network sharing agreement (including 5G) in addition to a renegotiation of the national roaming agreement and the conditions of use of the ORA fiber network, as well as the possibility of expanding the plant of own fiber. According to the news, the signature could occur in the coming weeks (they speak of September).
Positive news since this agreement would extend and improve the conditions of the current agreement (we understand that the result of the strong growth that the company is maintaining), which would allow MAS to ensure a better transition to 5G (at the time of occurrence) and extend its own fiber network (which would improve margins) as well as obtain cost and investment savings. Although we do not believe that the final conditions of the agreement come to light, so estimating a quantitative impact will be complicated, qualitatively it is very positive news since this type of agreement is one of the pillars of MAS's success.