EUR 100.00 For Business Accounts Only

IBERIAN DAILY 22 MAY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: RENEWABLES SECTOR, TELEFÓNICA.

Market not ready to fall
There were slight drops on European stock markets in view of the tension to be generated by the fiscal plan being negotiated by the Trump administration. In a divided STOXX 600, the winning sectors of the day were Telecoms and Technology, whereas Consumer Goods and Retail suffered the biggest losses. On the macro side, in the UK April’s inflation rose unexpectedly to 3.5% YoY (15-month high), as did the core figure, which rose to 3.8%. On the geopolitical front, the EC would be readying a trade proposal with tariff reductions on farming and industrial goods for US products. In Mexico, March’s retail sales rose much more than expected. In the US, the budget reform law is moving forward in Congress, while the 20Y bond auction was disappointing, leading to debt sales. In Japan, March’s machinery orders rose more than expected. In US business results, Medtronic, TJX and Lowe’s Companies were in line, whereas Target released disappointing earnings.
What we expect for today
European stock markets would open with drops near -1.0%, dragged down by doubts about the US sovereign debt. Currently, S&P futures are up +0.1% (the S&P 500 ended -1.5% lower vs. the European closing bell). Asian markets are falling (China’s CSI 300 -0.1% and Japan’s Nikkei -1.0%).
Today in the euro zone we will learn May’s preliminary manufacturing and services PMIs, in Germany May’s IFO, in Mexico March’s IGAE activity index and in the US weekly jobless claims, preliminary PMIs and April’s second-hand home sales. In US business results, Ralph Lauren, Ross Stores and Autodesk, among others, will release their earnings.


COMPANY NEWS

RENEWABLES SECTOR. A new and more restrictive IRA proposal in the US.
A new proposal or changes to the IRA (Inflation Reduction Act) was made public in the US last night that would include a worse phase-out of fiscal incentives (PTC, Production Tax Credit and ITC, Investment Tax Credit) for new renewable projects than that initially released in the first draft. Thus, the new phase out plan made public will entail a faster reduction of incentives, ending in 2029, three years earlier than initially expected.
Negative news that would offer less room to develop new renewable projects in the US mainly in solar and onshore. In our coverage universe the companies with higher exposure to the US would be as follows: Acciona Energía’s exposure (and Acciona’s, which controls 87% of the company and accounts for 70% of its EV) to the US is as follows: 3.4GW of expected capacity by the end of 2025 (< 25% of the total) with around 5.5TWh of production for 2025 (