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IBERIAN DAILY 23 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: NATURGY, SACYR.

Without significant changes
With the exception of the Ibex and the FTSE that ended in positive territory, the main European stock markets saw slight drops while prospects on the US debt ceiling negotiations deteriorated. In this regard, both the speaker of the House of Representatives, K. McCarthy and Biden were optimistic about a solution over the coming days despite the fact of not reaching an agreement yesterday. In the Euro STOXX, Travel&Leisure and Retail were the best-performing sectors, ending in positive territory, whereas Pharma and Insurance ended with the biggest drops. On the macro side, in the euro zone, May’s preliminary consumer confidence recovered less than expected, remaining in negative territory. From the ECB, the chief economist, P. Lane, expects inflation to converge rapidly to the 2% target. In Spain, according to CBRE, home sales will slow down by one third given the tightening of the financing conditions in 2023, with transactions standing below 500,000. In the US, N. Nashkari from the Fed warned that the probability of raising or not raising rates in June is equal but he did not rule out being forced to raise rates to 6.0% in 2023 if inflation does not recover as expected, whereas Bulllard and Daly insisted that they could be forced to raise additional 50bps. In Japan, May’s manufacturing PMI rose above 50 whereas the services PMI climbed to 56.3 from 55.4, suggesting greater dynamism in the 2Q’23.
What we expect for today
European stock markets would open flat with signs of exhaustion but underpinned by the good PMI data expected for May. Currently, S&P futures are up +0.14% (the S&P 500 ended -0.12% lower vs. the European closing bell). Volatility in the US dropped (VIX 17.21). Asian stock markets are sliding (China’s CSI 300 -0.70%, Japan’s Nikkei -0.53%).
Today in the euro zone we will learn May’s manufacturing and services PMI, in the US April’s new home sales and May’s Richmong manufacturing index. As for auctions, Germany will issue € 6 Bn in bonds due 2025 and Italy a new syndicated mandate of 15Y inflation-linked bonds.