Who Will Win in Catalonia? What does it Mean for Markets?

by | 21 Dec, 2017

The flag of Catalonia

The flag of Catalonia

The citizens of Catalonia in Spain are going to the polls today in a major regional election to determine the future of the region.

The vote will pit pro-independence parties against groups who wish for Catalonia to remain as a part of Spain. Earlier in the year, a pro-independence movement headed up by Carles Puigdemont held a referendum, which was savagely put down by Spanish police after it was deemed to be illegal by the government. Despite the crackdown, voters still turned out in force and a majority of those who had their say voted in favor of independence.

The Spanish Prime Minister Mariano Rajoy subsequently sacked the Catalan government and imposed direct rule, later calling for an election on December 21st, however the vote today could deepen tensions across Spain and is unlikely to resolve the issue.

The vote is expected to be very close. A high turnout is expected and the region is divided on the issue. The outcome may create more volatility in Spanish stock markets and the Euro, though so far the single currency is looking stronger against the Dollar and fairly flat against the Pound today. A victory for anti-independence parties would raise hopes for a recovery in Spanish stocks next year, as they have under-performed other EU markets in 2017.

The markets clearly favour a unified Spain, as could be seen by a significant rally in stocks after independence hopes were cut down in late October, as fresh opinion polls pointed to defeat for separatist policymakers in this months elections.

The Catalan vote is another thorn in the side of a European Union which is divided. To the East, Poland has become entrenched in opposition to the EU’s migrant policies, while to the West, Brexit negotiations trundle on at a slow pace. In Germany, there is still no majority for Angela Merkel’s party in the Bundestag. Austria is also posing problems thanks to its young right-wing leader Sebastian Kurz of the Freedom Party, who is taking a hardline stance on immigration too. At 31, he is the youngest leader of any nation on earth.

Mediterranean countries are still facing significant economic hardships too, despite improving economic data out of the majority of Eurozone countries.

Today we are watching: #spainx #eurusd #eurgbp #bats-es35

2 key indices tracking Spanish stocks (FTSE Spain and the BATS Spain 35) are seen struggling against rivals (CAC40 and DAX30) towards tail end of 2017

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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