EUR 100.00 For Business Accounts Only

IBERIAN DAILY 12 APRIL (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: REPSOL.

Europe getting back on track
Despite the inversion of the US debt curve, European markets saw gains following the solid data out of China. In the Euro STOXX, cyclical sectors like Basic Materials and Autos led the gains vs. defensive sectors like Telecoms and Pharma, which fell the most. On the macro side, in the euro zone April’s SENTIX investor confidence recovered more than expected, whereas February’s retail sales contracted in line with expectations. From the IMF, P. Gourinchas stated that Central Banks will most likely continue to restrict money supply in order to tackle inflation, as the financial risks are very much limited. The new IMF forecasts point to 0.8% growth in the Euro zone in 2023 (+0.1pp vs. previously) and 1.4% in 2024 (-0.2pp vs. previously), and 1.6% growth in the US in 2023 (+0.2pp vs. previously) and 1.1% in 2024 (+0.1pp vs. previously). For Spain, it raised its growth forecast for 2023 to 1.5% but cut that for 2024 to 2%. Separately, the institution warned that inflation will remain at 3% at least until 2025, which poses a hard landing risk for the economy, and that the banking crisis is a source of major concern but there are no signs such as those seen in 2008. On another note, Fed member Goolsbee (dovish, with vote) asked for caution before raising rates again, although the market prices in a +25bps rise in May. In Brazil, March’s inflation slowed more than the consensus expected. In Japan, March’s machinery orders contracted less than expected.
What we expect for today
The European stock markets would open flat awaiting the publication of the US inflation data. Currently, S&P futures are up +0.05% (the S&P 500 ended -0.10% lower vs. the European closing bell). Volatility in the US rose (VIX 19.20). Asian markets are rising (China’s CSI 300 +0.05% and Japan’s Nikkei +0.60%).
Today in the US we will learn March’s inflation and the minutes from the Fed’s March meeting. In debt auctions: Spain (€ 6.8 Bn in bonds due 2026, 2033 & 2024 and I/L bonds due 2033).


COMPANY NEWS

REPSOL. Solid 1Q’23 trading statement. We expect a positive reaction. BUY.
In the 1Q’23 trading statement released yesterday there were no surprises in crude oil prices (-8.7% vs. 4Q’22 to US$ 81.20/barrel, -20.5% vs. 1Q’22), but there were in production, which rose by +10.3% vs. 4Q’22 to 608 kboe/d and +9% vs. 1Q’23 (vs. 598 kboe/d consensus), due especially to the strong performance in North America (+26.3% vs. 4Q’22) and to a lesser extent in Europe, Africa and the rest of the world (-1.6% vs. 4Q’22). This compares to our estimate of +2% growth in 2023. Another positive aspect was the refining margin, which stood at US$ 15.60/bbl (vs. US$ 12.21 consensus), which meant a -17.5% drop vs. 4Q’22 but massive growth vs. 1Q’22 (+129.4%). This compares to our estimate of US$ 7.50/bbl for 2023. With this trading statement, we believe the 1Q’23 results (to be released on 27/04) should be solid and bring adjusted 1Q’23 Net Profit in line with the consensus (€ 1.28 Bn), without ruling out possible upgrades of around +5% to +10%. We expect a positive reaction, as the stock has fallen -2.7% YtD.