Renta 4: European opening with little change (Eurostoxx futures -0.2%, S&P futures +0.1%), in a session in which we continue to receive relevant data on both activity and prices, and awaiting the conclusions of the meeting between Biden and congressional leaders to discuss the US debt ceiling and avoid default. For the moment, the positions are still at odds and the Republicans are trying to reach an agreement to limit spending before accepting a debt ceiling increase. For her part, Yellen continues to affirm that the Treasury could run out of cash on 1 June.
Today in the Eurozone, the final April CPI data will confirm price levels that are still well above the 2% target: 7.0% year-on-year overall and 5.6% year-on-year core. A favourable context for the ECB to continue raising rates, with the market discounting a couple more hikes to 3.75% (deposit rate), the first in June and the next in July or September, depending on how the macroeconomic situation (inflation and economic activity) evolves, in an environment of virtual stagnation in light of the Euro zone’s 1Q23 GDP (+0.1% quarter-on-quarter) and the declines in leading cycle indicators such as the ZEW published yesterday in the Euro zone and Germany that point to growing fears of recession in the face of rate hikes and the credit crunch.
In Japan, preliminary 1Q23 GDP was better than expected at +0.4% quarter-on-quarter (versus +0.2%e and +0.0% previously).
In the US, apart from yesterday’s mixed data (weaker than expected retail sales versus better than expected industrial production), it is worth noting Home Depot’s results (share price -2%), which cut its 2023 guidance after a weaker than expected first quarter of sales. The company expects revenues -5% (versus previous flat) and EPS -7%/-13% (versus previous -5%), in a scenario of growing uncertainty about the economic cycle, higher interest rates, consumer spending shifting from goods to services and the search for cheaper products in a context of loss of purchasing power. Target publishes today and Walmart tomorrow.