Ibex 35 leaves Catalan crisis behind and ends October up 1.3%

What’s curious is that the Catalan affair is seeing how quickly things can move from being a problem to a solution. It appears that the tensions in Catalonia will stop being the drag on the market, and could convert it into the catalyst towards bringing it up to speed with European neighbours.

From Brussels, Carles Puigdemont spoke about dialogue once again, and added that he will respect the result of the elections in the region on 21 December.

Ratings agency Standard & Poor’s said that its rating for Spain will not be affected by the recent conflict and added that the application of Article 155 and the calling of elections has reduced tensions in the short term.

Prime risk in Spain has fallen more than 2%, below 110 points, while 10-year bond yields also fell more than 2% to 1.459%. The euro is down 0.07%, while Brent hit new annual highs with a rise of 0.4% to $61.15.

GAINS FOR THE IBEX

The rise of Tuesday was supported by stocks such as Siemens Gamesa, which shot up 6.05% after signing an important contract in the US. It rebounded yesterday and today also helped to reverse the losses of recent weeks.

Grifols was up 4.07% after a buy recommendation from Citigroup. The third best value was Viscofan (+2.75%). Sabadell, Caixabank, Colonial, Aena and Acciona were all up more than 2%.

The big stocks also were in the black on Tuesday. BBVA was up 1.39%, followed by Telefónica(+1.16%), Iberdrola (+1.5%), Inditex (+0.79%), Repsol (+0.59%) and Endesa (+0.38%). On the negative side was only Indra (-4.45%), ArcelorMittal (-1.91%), Bankinter (-0.63%), Bankia (-0.41%) and Santander(-0.05%).

Attention remains on company results. Samsung and BP published their figures, while in Spain Unicaja reported a profit of 136m euros, 30% less in the first nine months of the year. FCC said it had a net profit of 153.5m euros, contrasting with the losses of 179.4m it made in the same period in 2016. Acerinox saw its profits up by more than 200%.

In macro data of the day, Eurozone GDP was up 0.6% in the third quarter, beating expectations of 0.5%. Inflation in the same region fell to 1.4%, below the 1.5% expected. Unemployment in Europe fell to 8.9%, below the 9% forecast. The Bank of Japan maintained interest rates at -0.1%.

TECHNICAL ANALYSIS

“For weeks we have talked about the importance of breaching 10,410-10,420 points in closing prices to have a before and after in the Ibex, and it’s true that we have left the resistance behind and to recover positions with force. Looking at the strength of the market it doesn’t take much to think that there could be a correction but in theory it should be understood as a new opportunity to get on the buying train,” said Bolsamanía expert José María Rodríguez.

“Let’s not forget the rest of the indices in Europe are above yearly highs since May and for us to recover those levels we should go 6% higher. The zone of support is at 10,410-10,420 points.”