Heightened tensions in Catalonia punish the Ibex

Rising political tension in Catalonia is having a major effect on Spanish stocks on Wednesday. The Ibex fell 0.83%, more so than any other major European index, and fell below 10,300 points to 10,292.10. Among the fallers were Banco Sabadell (-3.78%) and Caixabank (-1.91%) with strong interests in the region. BBVA and Santander fell 1.1% and 0.88% respectively.

IBEX 35

11.413,100
-0,47%

CMC Market analyst David Madden pointed out that the situation has developed into ‘chaos’. “Spanish police have raided the headquarters of the Catalonian government and scenes of unrest on the back of this has weighed heavily on the Spanish market. The move by the Spanish authorities is likely to stoke independence calls, and this spooked investors.

ACS was the worst performer in the Ibex, amidst rumours about its affiliate Hochtief and Abertis. Speculation in the German press suggests a counteroffer may be on the way to compete with that of Atlantia.

Inditex was down 0.84% after releasing its quarterly results on Wednesday, with the market not impressed as the strength of the euro weakened its numbers.

Zara’s parent company announced an increased profit of 9% in the first quarter, with total sales increasing 11.5% to 11.67bn euros. However, analysts were not satisifed as it did not meet forecasts.

On the upside in the Ibex, there were rises for ArcelorMittal (+1.57%) Acerinox (+0.84%), Mediaset España (+0.74%), Técnicas Reunidas (+0.71%), Repsol(+0.56%), Amadeus (+0.17%) and Siemens Gamesa (+0.04%).

In other markets, the euro rose 0.03% to $1.1998, while the price of Brent crude oil bounced 2% to $56.25. Gold was up 0.4% to $1.315, while prime risk in Spain fell slightly to 111 points.

WHAT OF THE FED?

In the rest of Europe, indices closed flat ahead of comments from the Federal Reserve meeting this evening. It’s expected that the Fed will announce its intention to reduce its balance next month, and give more of a clue about whether it will raise interest rates again this year. Some analysts believe interest rates will be raised once again, while others are not so sure.

In the geopolitical arena, Donald Trump and his words about North Korea at the UN General Assembly made the news. The president threatened to ‘totally destroy’ the state, while also criticising Nicolas Maduro’s Venezuelan regime.

AND THE IBEX?

The Ibex remains focused on its own objective, in the short term, of surpassing 10,400 points, something which has become more complex after Wednesday’s losses. “Technically, we keep hoping that we will be able to leave behind the resistance at 10,400. Clearing this hurdle would be the only way for us to look towards another move towards the next resistance of 10,550 points,” said Bolsamanía technical expert José María Rodríguez.