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IBERIAN DAILY 23 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: METROVACESA.

The Fed kept the script unchanged, but Yellen dragged down the market
Following the strong volatility of the past few sessions, it was a calm day in Europe, with moderate gains in the main indices and with sovereign bond yields recovering. Thus, in the Euro STOXX, Consumer Goods and Food posted the biggest gains, while Real Estate and Basic Resources were the worst relative performers. On the macro side, in the UK February’s inflation rose to 10.4% YoY after 4 straight months falling. In the US, as expected the Fed raised rates by 25bps to the range of 4.75-5.00% in a communiqué that slightly lowered the possibility of additional increase, showing caution in view of the impact from the recent banking crisis. The Fed cut 2023-24 GDP slightly to 0.4% and 1.2% (vs. 0.5% and 1.6%) and raised the underlying consumption deflator by +0.1% to 3.6% and 2.6%, and thus Powell ruled out rate cuts in 2023 (the expected cuts of -100bps in 2024 and another -100bps in 2025 are maintained). Separately, Janet Yellen warned that she is not considering the possibility of insuring deposits without Congress’s approval (using the Exchange Stabilisation Funds), although some Senators believe there is a framework to reach an agreement. In Spain, the BoS has presented its quarterly report and economic forecasts for Spain, in which it foresees that in 1Q’23 the GDP could have risen slightly to 0.3%. For the full year it estimates GDP will rise to 1.6%, meaning +0.3% more than the previous forecasts from December (and vs. 5.5% as of YE2022). For 2024 the estimates fall to 2.3% vs. 2.7% in December, whereas the 2.1% GDP’25 is unchanged. As for public debt, at the end of this year it will reach 111.1% of GDP, a slight increase vs. the previous estimate of 110.6%, whereas for 2024 it estimates 108.8% and 109.09% for 2025.
What we expect for today
The European stock markets would open with slight losses of as much as -0.5% that might tone down throughout the session. Currently, S&P futures are up +0.6% (the S&P 500 ended -1.45% lower vs. the European closing bell). Volatility in the US rose (VIX 22.26). Asian markets are mixed (China’s CSI 300 +0.7% and Japan’s Nikkei -0.17%).
Today in the euro zone the European Council will meet and we will learn March’s consumer confidence, in the UK the BoE will meet and in the US we will learn February’s new home sales.