Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Catalonian crisis drags European bourses down, banks fall

Published 10/04/2017, 01:25 PM
Updated 10/04/2017, 01:25 PM
© Reuters. The German share price index, DAX board, is seen at the stock exchange in Frankfurt

© Reuters. The German share price index, DAX board, is seen at the stock exchange in Frankfurt

By Julien Ponthus and Helen Reid

LONDON (Reuters) - European shares fell on Wednesday with Spain's IBEX marking its biggest loss since last year's Brexit vote shook equity markets.

The impact of the crisis in Catalonia spread from Madrid and Spanish banks to the wider industry and euro zone region, particularly Italy.

The pan-European STOXX 600 (STOXX) index was down 0.1 percent at its close while Spain's IBEX (IBEX) posted a 2.9 percent loss.

Catalonia-headquartered Caixabank (MC:CABK) and Banco Sabadell (MC:SABE), the stocks most sensitive to the rising political risk, sank 5 and 5.7 pct.

King Felipe VI accused Catalan secessionist leaders of shattering democratic principles in a rare televised speech -- itself a sign of the gravity of the crisis, analysts said.

Catalonia's leader said that the region will declare independence in a matter of days, a remark that sent Spain's borrowing costs soaring.

Italian banks also took a hit as yields on Italian sovereign bonds rose, with Banco BPM (MI:BAMI) and UBI Banca (MI:UBI) losing 5.3 and 3.8 percent respectively.

The broader euro zone banking index (SX7E) dropped 2.2 percent, its worst fall since mid-May with almost all of its constituents in the red.

Laurent Gaetani, head of Degroof Petercam Gestion France, said he was "surprised by the impact" of the Catalonian crisis on markets given that a process leading to effective independence for the province is still widely seen as unlikely.

"I am not too worried," he added, arguing some investors may even see the dip in banking shares as an opportunity.

Other investors were also phlegmatic.

"There is a little impact from Catalonia, that's for sure, because a few large stocks are based there ... but this is nothing extraordinary," said Jerome Legras, head of research at Axiom Alternative Investments.

He said the price swings were not huge and the main view on the street was that independence was unlikely and the impact on banks outside Spain should remain limited.

Energy stocks (SXEP) were down 0.6 percent, dampened by caution that a rally that has lasted for most of the third quarter would not make it to the end of the year.

Germany's DAX (GDAXI), which was closed for a bank holiday on Tuesday, caught up lost territory with a new record high and was the only main bourse trading in positive territory, with a 0.5 percent rise.

© Reuters. The German share price index, DAX board, is seen at the stock exchange in Frankfurt

Buoyed by strong data in the United States, car makers boosted Germany's DAX, with Volkswagen (DE:VOWG_p) rising 2.3 percent and Daimler (DE:DAIGn) rising 1.2 percent.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.