Spanish stock market rallies after Catalonia suspends independence declaration

After Tuesday’s drop in the Spanish stock market amidst political tensions between Spain and Catalonia, on Wednesday the Ibex 35 rallied, opening the day at 1.5%.

By noon it was at 1.3%, as the market bounced back after Catalan president Carles Puigdemont fell short of declaring independence in his highly anticipated key parliamentary speech held on Tuesday evening.

All Catalan companies registered gains, especially Colonial (+ 2.40%) and Cellnex (+ 1.93%).  Banks also saw big increases, with Banco Sabadell up by 1.56%, and CaixaBank by 1.75% at noon. Gas Natural increased by 1.17% and the pharmaceutical multinational Grífols was up by 1.42%.

The risk premium for Spain’s public debt has also relaxed to slightly below 120 basis points, representing a decrease of 5.07% throughout Wednesday, the day after Puigdemont’s announcement of suspending any declaration of independence “for a few weeks,” in order to allow more time for talks with the Spanish government.

The political conflict between Spain and Catalonia seemed to have affected other European markets as well. Many had opened lower on Tuesday but recovered on Wednesday, with the Euro even hitting a two week high. Further afield, the Nikkei 225 closed at a record 21-year high.