The Ibex recovers 10,200 points ahead of key day in Catalonia

The highest performers in the Ibex were Colonial (+2.5%) and energy firms such as Enagás (+2%), Iberdrola (+1.9%), Endesa (+1.8%) y Red Eléctrica (+1.9%). Iberdrola was in the news after its affiliate in Brazil Neoenergia put a date on its market exit, which will be at the end of October. Partners that wish to sell their stakes will do so alongside the associated banks.

The worst performers were supermarket chain DIA (-1.3%), followed by BBVA (-1%) and Mapfre (-1%). The last two were affected by a major fall in the Turkish lira, owing to an ongoing diplomatic conflict between the country and the US.

Blue chip stocks were mostly positive apart from BBVA however. Inditex was up 1.15%, followed by Gas Natural Fenosa (+1.12%), Telefonica (+0.96%) and Santander (+0.09%). Repsol was flat while Abertis gained 0.49%. The motorway construction group saw its offer for Atlantia authorised by the CNMV, while investment fund TCI raised its stake to 1.4% from 1%.

In the general stock exchange, GAM (+6.7%) and Prisa (+5.2%) were the most profitable stocks, while Dogi (-6.5%) and Service Point(-4.7%) led the sales.

CATALONIA AND DUI

Although all the voices point towards not declaring independence as no outside entity would recognise it, the truth is that if the process arrives at this point the Ibex would collect it.

Whether that is price in or not, there will be major caution in the next five days, volatility is likely to remain in the Spanish market.

“For the long-term outlook, the real question is whether or not Madrid tries to crush the Catalan pro-independence forces before it starts a dialogue – or starts to talk soon,” Berenberg analysts said in a report. “First, the resulting bitterness may strengthen the radical Catalan parties over time even if the Catalan pro-independence forces lose now. Second, it could undermine Rajoy’s minority government in Madrid. Rajoy may need the support of the Basque nationalists to pass a budget and govern effectively. In a best case scenario, Madrid and Barcelona would soon agree to revive the autonomy deal that foundered in the constitutional court in 2010.”

CMC Markets added that Catalonia will remain centre stage this week. “The demonstrations showed us that there are two sides to the Catalan situation. Mariano Rajoy, the Spanish Prime Minister, has not ruled out stripping the region of its autonomous powers, which would likely infuriate the Catalan separatists.”

NORTH KOREA, ECB, BREXIT…

Away from Catalonia, the week begins with North Korea again after Donald Trump said on Twitter that “only one thing will work”, in reference to the attack on the Pyongyang regime. In the US, the bond market remains closed for the Columbus Day holiday, but stock markets are open as usual.

The European Central Bank published the results of stress tests. The main conclusion was that interest rates are being well managed in most cases. In addition, European finance ministers are to meet in Luxembourg which will be attended by German finance minister Wolfgang Schaeuble.

Brussels will be the venue for the fifth round of Brexit negotiations between the UK and the EU. Santander will see its ‘investor day’ take place in New York on Tuesday.

TECHNICAL ANALYSIS

“The Ibex 35 ended far from the highs of the day and it’s not exactly a sign of strength. That said, in reality it’s not as important to finish above 10,000 as it is 10,300. The implications are the same for one level as the other,” said Bolsmanía technical analyst José María Rodríguez.

“Why?” he asks. “Very simple. Because the resistance above we find at 10,410 points. The thing is that as we know, the Ibex remains trapped in an impeccable lower channel for the last five months.”