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IBERIAN DAILY 06 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, SACYR.

Profit-taking after the rally
The stock markets put an end to the gains made in early October, where the strong rally in sovereign bond yields and the bearish US opening dragged down the European indices, with losses of more than -1% in many cases. Thus, the only sectors within the Euro STOXX that closed with gains were Energy and Financial Resources vs. the bigger drops in Autos and Real Estate. On the macro side, in the Euro zone, September’s final Services PMI was raised slightly (in Spain, it fell more than expected to 48.5%). In Spain, the BoS raised its growth outlook for 2022 to +4.5% and cut that for 2023 to +1.4% (from 4.1% and +2.8% in June). It also raised its inflation forecast for 2022/23 to 8.7%/5.6% (vs. 7.2%/2.6% previously). In the US, September’s ISM non-manufacturing index fell less than expected, with very strong employment and private employment components according to the ADP survey. Meanwhile, Dali and Bostic, from the Fed, warned that the market is “getting it wrong” regarding the rate cuts expected for 2023. Separately, the OPEC+ agreed to a reduction of 2 M b/d in its production target, the largest since the beginning of the pandemic, although the impact would be very small as the cartel was producing well below the established quotas. The USA has stated that, with this move, the OPEC+ is aligning itself with Russian interests.
What we expect for today
European stock markets would see gains of around +1.0% with the positive performance of the financial and technology sectors. Currently, S&P futures are up +0.4% (the S&P 500 ended +1.07% higher vs. the European closing bell). Volatility in the US dropped (VIX 28.55). Asian markets are rising (China’s CSI 300 closed and Japan’s Nikkei +0.9%).
Today in Spain we will learn August’s industrial output. As for auctions, Spain will issue € 5 Bn in bonds due 2029, 2030, 2032 and 2050.


COMPANY NEWS

SACYR. To sell 49% of its Services and Water divisions. BUY
Yesterday, the company announced the sale of 49% of its Services division and the incorporation of a minority partner into its Water division (49% stake), which will allow it to reduce recourse debt to zero (guidance’22 €