Madrid stocks and euro slide on Catalonia vote

The euro and the Spanish stock market slid on Monday as voting in a banned Catalonia independence referendum was marked by a violent police crackdown.

But  most other European markets rose as the weaker euro is positive for exporters in the region, analysts said.

“European bourses are starting the new quarter positively as US dollar strength and subsequent sterling and euro weakness help to aid the army of foreign earning and exporting names in the region,”said Accendo Markets analyst, Henry Croft. 

A firmer start on Wall Street also helped underpin prices in Europe.

Nevertheless, “traders are clearly a little concerned about the impact that the (Catalan) vote, not to mention how the situation was handled by the Spanish authorities,” said Oanda analyst Craig Erlam. 

Spain’s IBEX stock index was “the worst performing major index in Europe on Monday, down more than one percent, while the euro is also suffering in the aftermath of the vote, down more than half a percent against the dollar,” Erlam said. 

Frankfurt, Paris and London equities posted moderate gains, with the British market buoyed somewhat as the collapse of Monarch Airlines handed a boost to rival carriers.

Monarch Airlines ceased trading suddenly Monday following a financial collapse, the biggest failure of an airline in Britain, prompting the government into emergency action in returning home 110,000 stranded passengers.

The news sent EasyJet shares soaring 3.2 percent to 1,256 pence, while British Airways owner IAG rallied 1.43 percent to 602 pence.

Madrid stocks, however, shed nearly two percent on the back of the disputed Catalonia vote, and the European single currency fell sharply against the dollar.

Spain will do “everything within the law” to prevent Catalonia from declaring independence, Justice Minister Rafael Catala said Monday, a day after Catalonia’s regional government declared victory in a banned secession referendum.

Catalan president Carles Puigdemont declared late Sunday that Catalonia had won the right to break away from Spain after 90 percent of voters taking part in the referendum voted for independence, defying a sometimes violent police crackdown and fierce opposition from Madrid.

– ‘Chaos in Catalonia’ –

“The chaos in Catalonia yesterday on the back of the referendum on independence has sent the Spanish stock market lower,” said CMC Markets analyst David Madden.

“Violent clashes between the police and voters has spooked investors, and money is flowing out of the country on account of it.

“Thanks to the heavy-handed response from Madrid, the Catalonian question has now become even more divisive.”

In Asia, markets advanced Monday following records on Wall Street last week on hopes that President Donald Trump’s tax reforms would breathe new life into the US economy. 

Both the S&P 500 and Nasdaq ended at records, with investors buoyed by expectations of strong earnings ahead of the third-quarter corporate reporting season, which begins in about two weeks.

Trump’s economic agenda has been hobbled as the White House became embroiled in a host of crises, from allegations of Russian interference in the American presidential election to Trump’s failed attempt to repeal health care legislation.

The latest tax cut proposals are also expected to face a tough time in Congress, with leaders in both parties likely to raise questions about how the reforms will be paid for.

Hong Kong and Shanghai were meanwhile closed for a public holiday on Monday.

– Key figures around 1340 GMT –

New York – DOW: UP 0.2 percent at 22,440.04 points

London – FTSE 100: UP 0.6 percent at 7,420.24

Frankfurt – DAX 30: UP 0.3 percent at 12,860.43

Paris – CAC 40: UP 0.2 percent at 5,338.11

Madrid – IBEX 35: DOWN 1.8 percent at 10,192.40

EURO STOXX 50: DOWN 0.1 percent at 3,591.77

Tokyo – Nikkei 225: UP 0.2 percent at 20,400.78 (close)

Euro/dollar: UP at $1.1758 from $1.1.1813 late Friday 

Dollar/yen: DOWN at 112.58 yen from 112.82 yen 

Pound/dollar: DOWN at $1.3287 from $1.3317

Oil – Brent North Sea: DOWN $1.17 at $55.62 per barrel

Oil – West Texas Intermediate: DOWN $1.38 cents at $50.29

Source: AFP