Ibex 35 rockets as Catalan government folds and the flight of Puigdemont

The Ibex 35 closed 2.44% higher on Monday, allowing it to surpass the significant resistance of 10,410 points, at 10,446 points. This came after a Friday when Mariano Rajoy called elections in Catalonia and dissolved the local government. Prosecutors in Madrid brought charges of rebellion and sedition against the local authorities.

For now, the measures announced by Mariano Rajoy have pleased the market. They have not seen counter-measures from the Catalan government.

The most recent news is that ex-President Carles Puigdemont has travelled to Belgium to request political asylum. The elections in the region will take place on 21 December, which has also been welcomed by investors.

State prosecutor José Manuel Maza announced charges were being instigated for the crimes of rebellion and sedition for the main ringleaders of the government.

RHYTHM OF THE SESSION

The stocks which have suffered the most from the political uncertainty performed best on Monday. Banco Sabadell shot up 5.67%, Inmobiliaria Colonial by 4.48%, Caixabank 4.17% and Merlin Properties 3.78%, while Grifols was up 3.84%. Siemens Gamesa gained 4.12% while Mapfre was up 3.31%.

Regarding the blue chip stocks, they were also up. BBVA gained 3.02%, followed by Inditex on 2.96%, Repsol (+2.86%) Iberdrola (+2.68%), Endesa(+2.65%), Telefónica (+2.43%) y Santander (+2.25%). Only Indra was in the red, by 2.57%, in the Ibex.

RESULTS AND DATA

Outside of politics, investors remain alert to current events in micro. Bankia reported results on Monday, in which it had profits of 739m euros to September, 1% more. Its shares were up 2.21% to 4.11 euros.

Last week there were results from several other big banks, in the middle of the escalation of problems in Catalonia. On this issue, Bankia CEO José Sevilla said there was a “certain level of worry” about the crisis but added that it had normalised. Away from Spain, HSBC reported its figures, profiting 3.24bn dollars in the third quarter.

Spanish inflation was down 1.6% in October, while GDP for Q3 was at 0.8% higher. In Germany, retail sales rose 4.1% in September, above the 3.0% expected. Spanish stock exchanges will open as normal despite the holiday on Wednesday for the All Saints Day.

TECHNICAL ANALYSIS

“With one session left in the month, at least we can say the Ibex 35 is breaking resistances. We began October with significant losses which brought it to a low of 9,922 points, while it later rebounded to bring it away from a lateral movement,” said Bolsamanía analyst José María Rodríguez.

“After a tense Thursday and Friday where there was a lot of volatility, the price eventually finished above the important resistance of 10,410 points. The ideal thing is that this confirms the weekly graphs and the further it moves away the better.”