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IBERIAN DAILY 04 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: REDEIA, TELEFÓNICA.


Overbuying starts to correct following another session of risk aversion
European markets saw another session of profit taking at the start of the year, where this time cyclical stocks were hit the hardest. In the STOXX 600, the sectors rising the most were defensive ones like Household Goods, Pharma and Food, whereas cyclical sectors like Financial Services, Retail and Consumer Goods fell the most (more than -2.0%). On the macro side, in Spain the number of unemployed once again fell in December’23, and although the level is the lowest since 2007, the MoM drop is the smallest over the past five years (except in 2020, the year of Covid-19), showing signs of cooling on the job market. In Germany, the number of unemployed rose less than expected in December. In the US, December’s manufacturing ISM recovered more than expected, but the orders and prices indices were weaker, and on the whole a drop in activity continues to be seen. JOLTS job openings for November beat expectations (thanks in part to the strong upward revision to the previous data). Lastly, the Fed meeting minutes brought no surprises, confirming the aim to cut rates in 2024, but still insisting in not carrying out any premature rate cuts. In China, the Caixin services PMI for December rose more than expected to a five-month high. In Japan, the BoJ governor stated that April would be the month in which monetary policy would begin to change. On the geopolitical side, Iran has suffered the worst attack over the past few years, and the Israel-Hamas conflict threatens to spread throughout the entire region.
What we expect for today
European stock markets would open flat with a slight bullish slant, but limited given the growing geopolitical risk. Currently, S&P futures are up +0.15% (the S&P 500 ended down -0.2% vs. the European closing bell). Volatility in the US rose (VIX 14.04). Asian stock markets are sliding (China’s CSI 300 -0.8%, Japan’s Nikkei -0.5%).
Today in the euro zone we will learn December’s final services PMI and in Germany December’s final inflation and in the US December’s ADP private employment survey and weekly jobless claims.