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IBERIAN DAILY 14 DECEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: NATURGY, UNICAJA.

Stability in Europe ahead of the ECB meeting
Slight drops in European stock markets in a session marked by the Fed’s December meeting. In the STOXX 600 the best-performing sectors were Chemicals and Pharma, whereas Telecoms, Autos and Retail fell the most (around -1.0%). On the macro side, in the euro zone October’s industrial output contracted more than expected. In the US, the Fed did not raise rates, as expected, but with a dovish message its members begin to focus on when to begin the cuts, whereas the new forecasts are for up to -75bps of cuts in 2024 (rates would end between 4.5% and 4.75%) vs. -50bps in the previous forecast, and maintaining another -100bps of cuts for 2025. As for macro data, November’s production prices slowed more than expected, coming in at 2.5% YoY. In Brazil, as expected the Central Bank cut the Selic rate to 11.75% from 12.25%. In China, total financing and new loans recovered less than expected in November. In Japan, machinery orders rose unexpectedly in October.
What we expect for today
European stock markets would open with gains of more than +1.0%, led by growth and bond proxies, whereas financials would show some underperformance with the market pricing in more than -100bps of cuts from the Fed for 2024. Currently, S&P futures are up +0.34% (the S&P 500 ended +1.25% higher vs. the European closing bell). Volatility in the US rose (VIX 12.19). Asian stock markets are falling (China’s CSI 300 -0.10%, Japan’s Nikkei -0.75%).
Today in Spain we will learn November’s final inflation, in Europe the ECB will meet and in the UK the BoE will meet.