Expectations for today’s session
Main macroeconomic events In the Eurozone, the final CPI data is published in April. In the United States we will know the leading index
In the Eurozone The final CPI data is published in April, general year-on-year (+2.4% and preliminary and previous), and underlying (+2.7% and preliminary and +2.9% previous).
Furthermore, in USA We will know the leading index (-0.3% and previous) for April.
Financial markets European stock markets open slightly lower (Eurostoxx futures -0.4%), weighed down by data in China that point to unbalanced growth in April
The european bags open slightly lower (Eurostoxx futures -0.4%), weighed down by data in China that points to unbalanced growth in April, with a slowdown in consumption (retail sales +2.3% vs. +3.7%e and +3.1% previously, its slowest pace since 2022), while manufacturing accelerates (industrial production +6.7% vs. +5.5%e and +4.5% previous). This mixed data could prevent the government from adopting significant additional stimulus. In essence, the real estate sector continues to weigh down the economy, with real estate investment accelerating its decline -9.8% (vs -9.6% and -9.5% previously), as well as residential property sales -31.1% (-30.7% previously) , while housing prices also intensify their declines, both new and second-hand. It is thus appreciated how underlying structural problems persist, to which are added weak credit and prices, and in a context of growing trade tensions between China and the US and Europe..
Looking ahead to the rest of the session, final April CPI data in the Eurozone will confirm the preliminaries (overall stable at 2.4%, underlying moderating to 2.7% vs. 2.9% in March). Data that will facilitate the first rate cut by the ECB on June 6, although from then on the rate of cuts will be data-dependent. In this sense, ECB’s Isabel Schnabel says a second cut in July is not guaranteedmaking it necessary to closely monitor inflation for which there are upward risks (geopolitics, salaries).
In it business level, yesterday we highlighted Walmart’s 1Q24 results (share price +7%), which beat expectations slightly in sales and to a greater extent in EPS, while improving its guidance to the upper part of the range previously presented.
Main business events In France, Engie will present its results
Today in France, Engie presents its 1Q24 results.
Fundamental analysis of the previous session
Macroeconomic analysis In Spain, we were attentive to the year-on-year home sales data
In Spainwe were attentive to the year-on-year data for home sales -19.3% (vs. +5.8% previously) in March, which showed a clear slowdown.
On the other hand, in USA, the monthly industrial production data was published 0% (vs +0.1% and previously revised downwards) in April, along with the business outlook of the Philadelphia Fed 4.5 (vs 7.8e and 15.5 previous) of May. And like every week, we learned of the initial requests for unemployment benefits 222 thousand (vs. 220 thousand est and 232 thousand previously revised upwards).
Market analysis The main European indices had a session with a generally negative tone (EuroStoxx -0.56%, Cac -0.63%, Dax -0.69%)
The main European indices had a session with a generally negative tone (EuroStoxx -0.56%, Cac -0.63%, Dax -0.69%). In Spain, the Ibex 35, like its European counterparts, closed with losses -0.56%. Among the values that stood out in our selection were Colonial +4.15%, ArcelorMittal +1.84% and Merlin +1.63%. On the contrary, the biggest drops of the day were recorded by IAG -2.92%, Sabadell -2.44% and Grifols -2.26%.
Business analysis The financial sector occupies the main business news
FINANCIAL SECTOR. The Bank of Spain begins the procedures to review the countercyclical capital buffer.
1-. The Bank of Spain has initiated the procedure to review the framework for setting the countercyclical capital buffer (CCA) and establishing its percentage as of the 4th quarter of 2024.
2-. Under this review, the accumulation of the CCA is anticipated to situations where cyclical systemic risks are at a standard level.
3-. It is planned to establish a level of 0.5% CCA starting in 4Q24, which will be applicable from October 1, 2025. Likewise, and as long as cyclical systemic risks remain at a standard level, the Bank of Spain It is expected that the corresponding CCA percentage will increase to 1% starting in 4Q25, which will apply from October 1, 2026.
4-. The second CCA increase will require a new decision.
5-. Its most notable change is the association of a 1% CCA level with a standard level, intermediate between a high level and a low level, of cyclical systemic risks. Under the previous framework, the activation of this instrument occurred exclusively when the level of cyclical systemic risks was high.
Assessment
1-. This decision seeks to reinforce banking resilience in adverse cyclical phases, so that it contributes to economic stabilization and allows this cushion to be accumulated more gradually.
2-. As we have pointed out on previous occasions, this increase in capital needs that could range between 10-20 bp does not represent a problem for entities that have an excess vs. requirements (MDA) greater than 400 bp (without taking into account the generation up to Oct-2025) and does not jeopardize current dividend policies.
3-. Now the public consultation begins, the news should not have a negative impact given that this application of the increase in the CCA is delayed over time.
The Big 5 Wallet It is made up of: Colonial (20%), CaixaBank (20%), IAG (20%), Indra (20%), Repsol (20%). The profitability of the portfolio against the Ibex in 2024 is -0.30%. Relative returns of the Big 5 Portfolio vs Ibex in previous years: +3.30% in 2023, +5.66% in 2022, +1.63% in 2021, +5.47% in 2020, +20.80% in 2019, +8.84% in 2018, +8.26% in 2017, +7.29% in 2016, +5.38% in 2015, -0.75% in 2014, +17.6% in 2013 , +11% in 2012, +14% in 2011, +16% in 2010, +4% in 2009, -22% in 2008, +23% in 2007, +6% in 2006, +16% in 2005 and + 6% in 2004.
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