Ibex hits 10,300 points despite Puigdemont rejecting elections

Catalonia once again had the eyes of investors on Thursday. The Ibex 35 closed with a lift of 1.92% to 10,347 points, in a volatile week which began calmly. However, once it was thought Carles Puigdemont was going to call elections, the index shot up 2.6% before being deflated by his speech.

Banco Sabadell had led the gains with a rise of about 5% before seeing that trimmed to 3.15% to 1.66 euros. Colonial was the biggest gain in the end after rising 4.45%. Siemens Gamesa was up 4.25%.

The other focus of the attention on Thursday was company results. Telefonica had a profit of 2.439bn euros in the period to September, 9.6% more than the same period last year. The telecoms firm fell 0.55% in the market.

DIA was the worst performer in the Ibex (-3.9%) after reporting its results well below what had been expected. Santander rose 3.21% after profiting 5.077m euro, 10% more. The bank warned that the Catalan problem could weigh on its results towards the end of the year.

CATALONIA, (NO) INDEPENDENCE AND (NO) ELECTIONS

The market moved to the beat of Catalonia on Thursday. Puigdemont shocked expectations when he did not call elections after reports suggested all day that would be the case. The president of the regional authorities spoke at 5pm, after having suspended the initial tiem of around 2pm local time. He said that he did not have enough ‘guarantees’ from the government of Mariano Rajoy. He left in the hands of the parliament the answer to Article 155, by not declaring any form of independence.

ECB MAINTAINS RATES

The CB communicated that it will maintain the purchase of debt at least until September 2018 and reduced the amount of monthly purchases from 60bn to 30bn euros from January next year. The bank acted within its expected range: lengthening its bond-buying programme but reducing the quantity.. It will inject a further 270bn euros in the next year. It leaves the door open to raise this 30bn or regress to the end of the programme in September.

As expected, the ECB also maintained interest rates at 0.0%, while the credit rate is at 0.25% and deposit rate at -0.4%. As is becoming habitual, the entity reiterated that the “board of governors expects official interest rates to be maintained at the current levels for a prolonged period which will go beyond the immediate buying programme.”

Emphasising its monetary policy, the ECB said it will lengthen the ‘open bar’ for financial operations for as long as is necessary.

Other European markets closed with gains. The CAC 40 rose 1.38%, the FTSE 100 1.21% and the DAX 30 by 0.67%. Wall Street opened slightly higher as it waited on results from Amazon, Microsoft and Apple.

In Spain, the unemployment rate was reduced from 17.22% to 16.38%, the highest percentage drop since 2008.