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IBERIAN DAILY 04 JULY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: GRIFOLS, OHLA, TALGO.

Weak data out of the US
European stock markets rallied in view of the signs of a weaker macro situation in the US, sparking hope that the Fed will begin to relax its monetary policy soon. In the STOXX 600, the best-performing sectors were Basic Materials and Real Estate, whereas Pharma was the only sector with losses, and Energy ended practically flat. On the macro side, in the euro zone June’s final services PMI was raised slightly thanks to the better numbers in France (where Macron and the moderate left parties seek an alliance to prevent the absolute majority of Le Pen; the latest surveys suggest the latter will not obtain it) and Spain. From the ECB, Stournaras considers 2 additional cuts are reasonable this year, as rates would remain in restrictive territory. In the US, June’s non-manufacturing ISM fell much more than expected (below 50), with a sharp drop in the orders, employment and price headings. There was also poor data for the job market, with weekly jobless claims rising more than expected and June’s ADP private employment came in slightly below expectations (at a low since January’24). Lastly, the Fed’s June meeting minutes were slightly more dovish to compensate the cut of dots (that changed from depicting 3 cuts to just 1 in 2024) and several members were concerned about the effects from the monetary policy on the job market. Thus, the majority admits that the activity is cooling off although they need greater evidence on inflation and there is discrepancy about how long the monetary restrictive policy should continue. In Brazil, industrial output fell less than expected in May.
What we expect for today
Stock markets would open flat in a session marked by the US holiday. Currently, S&P futures are down -0.08% (the S&P 500 ended up +0.21% vs. the European closing bell). Asian stock markets are mixed (China’s CSI 300 -0.31%, Japan’s Nikkei +0.80%).
Today in Germany we will learn May’s industrial orders, in the euro zone June’s construction PMI and in the US the markets will be closed for the 4th of July holiday.