Ibex 35 falls below 10,500 points as Inditex, Santander and BBVA falter

Members of the Catalan government appeared in court in Madrid on Thursday. Supreme court judge Carmen Lamela agreed that the eight members should face prison, including former deputy president Oriol Junqueras.

Meanwhile, Carles Puigdemont had requested to appear via videolink, but remains in Belgium. The Bank of Spain has warned that the process will cost upwards of 30bn euros and added a recession could follow in Catalonia.

IBEX

Grifols was the worst performer on Thursday (-4.23%) after reporting its results for the third quarter, which were badly taken by investors. After Grifosl was IAG, (-2.39%), Mediaset España (-2.23%) and Acerinox (-2.21%).

On the other hand, Tecnicas Reunidas (+2.28%) was the best performer, followed by Abertis (+0.75%) and Ferrovial (+0.7%). As well as that, ArcelorMittal gained 0.53% after seeing its valuation increased by Deutsche Bank. Santander was down 0.19% while BBVA fell 0.23%. Inditex was the worst performing blue chip with a loss of 0.86%, while Endesa (-0.72%), Iberdrola (-0.26%) and Telefonica (-0.12%) were all down.

In the general exchange, Abengoa was up 8.82%, while eDreams rocketed 23.87%.

Company results were among the news of the day (REE fell 0.2% after informing of an improved profit of 5.1%). In the eurzone, PMIS remained at 58.5, below the expected 58.6. In Germany, unemployment was still at 5.6%.

Prime risk in Spain rebounded 1.8% to 110.80 points. The 10-year Spanish bond yields rose 0.6% to 1.48%, while in currency trading the euro rose 0.3% to $1.664.

BoE AND THE FED

Away from national politics, the Bank of England decided on Thursday to raise interest rates by 25 basic points as was expected. The pound started to fall with force after the first rate hike since 2007 as it is unclear whether it will trigger more rises in the price of money. The BoE said that hikes would be “gradual and in a limited measure”.

The decision arrives a day after a Fed meeting during which it reaffirmed its current policies. “The labour market will continue to restrengthen and economic activity has increased at a solid pace,” the Fed said.

However Wall Street attention was more concerned with other factors. Donald Trump is expected to announce at 9pm Spanish time the new chair of the Federal Reserve, and it is expected to be current board member Jerome Powell who will replace Janet Yellen from February next year. Powell is considered a centrist who favours prudence in rasiing rates and the balance of the Fed.

The first details of proposed tax reform from the Republican Party have been published along with the Trump administration. The target is to cut corporation tax from 35% to 20%, although it is to be done in a progressive manner in the coming years.

TECHNICAL ANALYSIS

“From a technical point of view, Thursday’s session was useful for checking the support of 10,410-10,420 points. We saw an intraday low of 10,403 points but closed clearly above. The Ibex 35 saw a throwback and from there it appears the money came to the rescue of the index,” said Bolsamanía analyst José María Rodríguez.

“Regardless, we will feel more comfortable if we close above resistances for the week. At company level, we should focus on important zones of resistances for some blue chips of the market: Telefonica and Santander which are at 9.27 euros and 5.9 euros respectively.