Spain investors rattled over Catalan tensions
THE Madrid stock market tumbled on Wednesday amid deepening worries about the Catalan independence crisis, although the euro gained on the dollar. All three major US stock indices finished at fresh records for the third day in a row, while equity markets elsewhere in Europe and Asia were mixed.
Madrid’s main index, the Ibex, fell nearly 3 percent at the close after sinking below the key 10,000 level.
As the European Union urged dialogue to ease the standoff between separatists in the northeastern region and Madrid, a regional government source said the independence declaration could be as early as Monday.
“The eyes of the world are on Catalonia and the spike in political tensions is likely to keep investors away,” said David Madden, an analyst at CMC Markets.
Analysts said they detected a switch from Spanish equities into German stocks, a move that pushed the Frankfurt exchange higher and close to record peaks, bucking a Europe-wide lower trend.
Paris shares were slightly softer at the closing bell.
Across Europe, investors were held back by “ongoing jitters following the unofficial independence referendum in Catalonia”, NFS Macro analyst Nick Stamenkovic said.
In spite of the unease, the euro advanced against the dollar as investors continued to bet that the European Central Bank would soon taper mon- etary stimulus.
“Investors are looking beyond these dangerous political risks to the next European Central Bank meeting,” said Kathy Lien of BK Asset Management. “We still think [the euro-dollar trade] could still take another hit from the political crisis in Spain but as the monetary policy decision nears, buyers will swoop in quickly.”
In the banking sector, Spain’s fifth-largest lender, Sabadell, was set yesterday to discuss whether to shift its registered headquarters away from Catalonia due to leaders’ threats to declare indepen- dence, a company spokesman said.
The Catalan firm, the second-biggest bank in the northeastern region, convened a board meeting after its stocks plunged as a political crisis between Catalonia and Madrid intensified.
A board meeting was scheduled for 1500 GMT yesterday and a possible shift of domicile “is one of the subjects that will be discussed and will be decided today”, a Sabadell spokesman who asked not to be named said.
The political standoff has dragged Spain into its worst political crisis in decades.