EUR 100.00 For Business Accounts Only

IBERIAN DAILY 16 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING SECTOR, REPSOL.

Inflation is moving in the right direction
December’s US inflation data showed that core components continue to fall, leaving Central Banks room to continue to lower rates. In the STOXX 600, all the sectors rose, with Real Estate and Retail being the big winners, whereas Consumer Goods and Food ended practically flat. On the macro side, in the UK general and core inflation fell more than expected in December. In Spain, the final inflation data confirmed the rise in the general figure to 2.8% and the core figure to 2.6%. In the euro zone, November’s industrial output rose less than expected. In the US, general inflation rose in line with expectations in December due to the contribution from energy, whereas the core figure came in below expectations. Separately, the NY Fed Empire index for January fell more than expected. Lastly, the Fed Beige Book depicted greater business dynamism and good prospects for 2025. In Japan, the BoJ members outlined that a rate rise in the meeting to be held on the 24th of January would be highly convenient. On the geopolitical front, a cease-fire has been reached in the end between Israel and Hamas, the fulfilment of which will be permanently watched from El Cairo. In 2024 business earnings, JP Morgan, Goldman Sachs and BlackRock beat expectations.
What we expect for today
Stock markets would open with gains of around +0.3%, with solid performance from tech stocks (backed by the good results and outlook in TSMC) and luxury (solid results from Richmond). Currently, S&P futures are up +0.1% (the S&P 500 ended up +0.5% vs. the European closing bell). Asian markets are rising (China’s CSI 300 +0.1% and Japan’s Nikkei +0.3%).
Today in Germany we will learn final inflation, in the UK November’s GDP and in the US December’s import prices, weekly jobless claims, January’s Philadelphia Fed, December’s retail sales and January’s NAHB residential construction confidence index. In business results, Morgan Stanley, Bancorp, BofA and M&T Bank will release their earnings.


COMPANY NEWS

REPSOL. 4Q’24 Trading statement shows operating improvement but still low production. We cut our T.P. keeping our OVERWEIGHT recommendation.
Output remained weak in 4Q’24 (554 Kboe/d vs. 553 Kboe/d 3Q’24), with the annual level coming in at the low range of the guidance (570/600 Kboe/d guidance). Brent crude prices, as expected, deteriorated to US$ 74.7/b in 4Q’24, although meeting the annual guidance (around US$ 80.00/b). On the positive side, the slight improvement in refining margins on the quarter stands out (to US$ 4.80/b vs, US$ 4.00/b 3Q’24: and US$ 6.60/b annually vs. US$ 7.00/b guidance) and in H.Hub gas prices (to US$ 2.80/MBtu vs. US$ 2.20/MBtu; and US$ 2.30/MBtu annually vs. US$ 2.40/MBtu guidance). In its 4Q’24 Results (20 Feb) we foresee around € 595 M of adjusted Net Profit (+6% vs. 3Q’24), in line with the consensus. After revising our estimates (-7% in Net Profit on average 24e/26e) and production for the period assumed (560 Kboe/d vs. 585 previously; based on M&A such as Colombia) we cut our T.P. by around -10% to € 15.16/sh., keeping our OVERWEIGHT recommendation. We expect a neutral market reaction today.