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IBERIAN DAILY 08 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: NEINOR HOMES.


MARKETS YESTERDAY AND TODAY

US stock markets at highs, despite the political turmoil
European stock markets reacted to the solid opening in the US after Trump promised an orderly transition to Joe Biden’s presidency. Despite this, the Speaker of the House, Nancy Pelosi, has called for Trump to be ousted immediately (through the 25th Amendment). Meanwhile, the results of the election on Tuesday in Georgia leave control of the House, Senate and presidency in the hands of the Democrats, which should speed up fiscal stimulus measures (there is speculation on a US$ 2,000 check for households and a tax and infrastructures package of around US$ 3 Tn). With all this in mind, the best-performing sectors in the Euro STOXX were Basic Materials and Construction, whereas Travel & Leisure and Technology had the biggest losses. On the macro side, in Germany November’s factory orders soundly beat expectations. In the euro zone the data released was a mixed bag: retail sales fell sharply in November, while the economic climate index rose more than expected and December’s inflation was in line. The base effect of energy prices should place general inflation above the core figure starting in March’21. In the US, weekly jobless claims came in below expectations, whereas December’s services ISM rose unexpectedly to 57.2. All this suggests a 4Q’20 GDP growing above the 4.6% QoQ expected. In Japan, November’s leading indicators were in line.
What we expect for today
European markets would open with gains, echoing the solid performance on US markets (especially tech stocks), where the fiscal expectation for the new Democrat Administration minimises the bad news surrounding lockdowns (also in a Chinese city near Beijing). Currently, S&P futures are rising (the S&P 500 closed flat vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 22%; -2pp). Asian markets are trading with mixed results (CSI 300 -0.42%, Japan +2.36%).
Today in Germany we will learn November’s trade balance, in Mexico December’s consumer confidence and in the US job creation, unemployment rate and salary gains for December as well as November’s final wholesale inventories.