Spanish stocks rebound, pound hobbled

Spanish stocks rebound, pound hobbled

File photo of a trader looking at the IBEX-35 index billboard at Madrid's stock exchange. (AFP PHOTO/JAVIER SORIANO)
LONDON: The Madrid stock market rebounded on Thursday (Oct 5) as the Spanish government moved to block a move by Catalonia to declare independence crisis, while doubts about the future of British Prime Minister Theresa May hobbled the pound.The Spanish capital's benchmark IBEX 35 shares index jumped 2.5 per cent, largely offsetting the previous day's 3.0-per cent slump.Trade was more muted elsewhere in Europe, with Frankfurt dipping, while Paris and London posted modest gains.The euro meanwhile slid towards US$1.17 - having topped US$1.20 just two weeks ago - as Spain's Catalonia crisis dragged on."The IBEX 35 is the best performer in Europe, which make a nice change seeing the Spanish market lost the most ground this week," said CMC Markets UK analyst David Madden.While Madrid and Catalonia are still at loggerheads, Madden said that a move by Spanish authorities to suspend a meeting of the Catalan parliament on Monday when lawmakers were expected to adopt an independence motion frustrates separatists.
"Nonetheless, investors will be fearful of the Spanish stock market while the Catalan question hangs over the country," he added.Shares in two Catalonia banks, which have been hammered in recent days, shot higher on reports they are considering moving their legal headquarters out of the region.Spain's fifth-biggest bank Sabadell, which confirmed its directors will discuss shifting its legal domicile away from Catalonia, saw its shares soar 6.2 per centMedia reports said Catalonia's biggest bank, CaixaBank, was considering a similar move, and its shares rose 4.9 per cent.
POUND SINKSMeanwhile, the British pound sank Thursday as investors fretted over Prime Minister Theresa May's political future one day after a "shambolic" speech to the Conservative Party's annual conference, analysts said.Sterling touched a one-month low at US$1.3122, while the European single currency had hit a three-week pinnacle at 89.33 pence per euro."After Theresa May's speech at the Tory party conference on Wednesday, there are rumours that she will be asked to step down by her own party," said City Index analyst Kathleen Brooks."The prospect of a leaderless UK in the middle of the Brexit process, or even worse, a Prime Minister Boris (Johnson), are right to unnerve sterling traders."US stocks pushed further into record territory for fourth straight day after data showed initial claims for jobless benefits fell last week by a greater amount than analysts had been expecting to 260,000.That followed data released Wednesday showing the US services sector hitting a 12-year high in September and manufacturing activity striking a six-year high, bolstering expectations for Friday's key payrolls release.The positive data is feeding expectation the US Federal Reserve will announce a third 2017 interest rate hike before the end of the year.Asian equities firmed in muted trade on Thursday, with a number of markets closed due to holidays.
Source: AFP/de