EUR 100.00 For Business Accounts Only

IBERIAN DAILY 17 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: SACYR, TALGO.

The macroeconomic data and the US debt ceiling keep the market caution
It was a negative session at both sides of the Atlantic, where macro data continued to recover ground after the Turkish elections and the weak Chinese data. Thus, the only sectors ending with gains in the Euro STOXX were Technology, Telecoms and Travel&Leisure vs. the sharper losses of Retail and Autos. On the macro side, in the euro zone, 1Q'23 GDP growth was confirmed at 1.3% YoY. In Germany, May's ZEW slowed down more than expected both in the expectations and current situation component. In the US, April's retail sales climbed less than expected whereas April's industrial output rose above expectations. Meanwhile, the NAHB confidence index in residential construction climbed more than expected to July'22 highs. Lastly, the agreement on the debt ceiling is apparently in good track after yesterday’s meeting and Biden has reduced his foreign agenda to close negotiations. In Japan, the 1Q’23 GDP rose more than expected thanks to the dynamism of private consumption. In China, home prices climbed again in April, with the YoY slowdown easing to -0.2% vs. -0.8% seen in March.
What we expect for today
The European stock markets would open flat amid uncertainty on the debt ceiling negotiations in the US, with the raw materials sector underpinned by home prices in China. Currently, S&P futures are up +0.18% (the S&P 500 ended down -0.39% vs. the European closing bell). Volatility in the US rose (VIX 17.99). Asian stock markets are mixed (China’s CSI 300 -0.57%, Japan’s Nikkei +0.87%).
Today in the euro zone we will learn April’s final inflation and in the US construction permits and April’s housing starts. In debt auctions: Germany (€ 4 Bn in bonds due 2033).


COMPANY NEWS

TALGO, BUY
According to the press, Deutsche Bahn would have awarded TLGO a contract to supply 56 additional trains that we assume belong to the Talgo 230 model and that would be part of the contract currently being executed (23 trains for € 550 M). At the price of the first order the contract could exceed € 1.3 Bn (around 40% of TLGO’s current backlog). The confirmation of this news, with the company having not made any comments, would mean the extension contract we were expecting and it would be highly positive for the group given the size and the fact that it represents the confirmation that TLGO’s products are interesting for the most demanding markets in Europe from a commercial point of view.