Felipe VI commissions Núñez Feijoo to try to form a government, despite still falling short of the 176 needed to reach a majority

Feijoo Rey

Renta 4| European markets open flat (Eurostoxx futures +0.2%, S&P futures +0.3%), with the focus today on August PMIs and Nvidia’s results and awaiting tomorrow’s central bankers’ meeting in Jackson Hole.

On the macroeconomic front, the focus will be on the preliminary PMIs for August. This morning in Japan, the data shows weakness in industry and resilience in services: manufacturing 49.7 (49.6 previously) and services 54.3 (53.8 previously). The same data will be released later in the session for the eurozone, Germany, France, the UK and the US, and will give us the most updated version of the global business cycle momentum. We expect to see the manufacturing contraction to continue, timid in the US (49 estimated) and more intense in Europe (42.6 estimated), especially in Germany (38.5 estimated, approaching the Great Confinement low of 35). On the other hand, the services sector is expected to slow down in both areas, although remaining in the expansion zone, more resilient in the US (52 estimated) than in Europe (50.5 estimated).

On the corporate front, we will be keeping an eye on Nvidia, which yesterday set a new all-time high, awaiting the 2Q23 accounts to be presented today, where the focus will be on whether the expectations placed on AI are reflected in the company’s results. We recall that its share price accumulated a 212% revaluation in 2023 and advanced +25% in a single day with the publication of better than expected 1Q23 results and 2Q23 guidance. It was also the trigger for the “Magnificent 7” (Nvidia, Apple, Microsoft, Amazon, Meta, Tesla and Alphabet) to account for more than 70% of the S&P’s rise in the year, in the heat of the possible future business around AI.

In Spain, and at the political level, King Felipe VI has entrusted Núñez Feijoo with the task of trying to form a government. With 137 PP seats and the possibility of reaching 172 with support from other parties, he would still fall short of the 176 needed to achieve a majority.

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