Spanish index drops sharply after poll but shares elsewhere gain groundPrime minister Rajoy wins election but no overall majorityOil falls to 11 year low 11.44am GMTHere’s more on why the Spanish market is falling following the weekend’s election,courtesy of Bloomberg:“The market was not alert for this result, it’s one of the worst scenarios that we could imagine, or ” Nuria Alvarez,a bank analyst at Renta 4 Banco SA in Madrid, said by phone. “The uncertainty is especially bad for the banking and the utility sectors since there can be regulatory changes that could affect them.” 11.42am GMTEuropean markets are continuing to hold much of their gains, or with the exception being Spain after the uncertain election result. The Ibex is currently down around 2% but Germany’s Dax and the FTSE 100 are both up around 0.9%,while France’s Cac has climbed 0.5%.
On Wall Street the Dow Jones Industrial Average is forecast to open around 120 points higher, so the mini-rally could be maintained. 11.33am GMTDespite the CBI survey coming in slightly below expectations, or it does point to a fair run-up to Christmas,says Howard Archer, chief UK and European economist at IHS Global Insight: Most sectors are reported to occupy seen sales growth in December, and with strong performances in the online,clothing and recreational goods sectors, and also for online retailers.
The relatively decent CBI survey follows on from the Office for National Statistics reporting that retail sales volumes jumped 1.7% month-on-month and 5.0% year-on-year in November. 11.10am GMTUK retail sales rose slightly less than expected in the run-up to Christmas, and according to the latest distributive trends survey from the CBI,with the outlook for January also feeble.
The balance in the survey rose from a nine month low of +7 in November to +19 in December, but this was lower than the +21 forecast by a Reuters poll. The balance records the inequity between the number responding positively and those replying negatively.
It’s no surprise sales occupy recovered as we head into the final shopping days of the Christmas season. It would be ideal if the industry could sustain that momentum into the New Year but retailers know 2015 was tough, and they’re expecting 2016 to start in much the same vein. 10.42am GMTHere’s the worst performers so far in the Spanish index: 10.28am GMTFor a break from the serious commerce,why not try our Christmas quiz: Related: The bumper commerce Christmas Quiz 2015 10.01am GMTMore on the rebound in stock markets, Spain excepted. Jasper Lawler at CMC Markets said:lean holiday market liquidity has spurred a nice rebound in share prices on Monday after uncertainty surrounding Spain’s election result caused a lower open across Europe. Spain’s Ibex stock index dived to its worst day in three months whilst Spanish bond yields spiked as investors reacted to the country’s uncertain political future.
There is no clear majority after Sunday’s election in Spain since a coalition between prime minister Rajoy’s People’s Party and the liberal Ciudadanos would not be enough to form a majority. There’s a chance a socialist government could choose charge if Rajoy can’t form an alliance of parties in the next few days. 9.36am GMTThe European Central Bank disappointed the market earlier this month when its latest stimulus programme was deemed insufficient to boost the region’s flagging economy.
The ECB had been tipped to unveil a major expansion of its €60bn-a-month quantitative easing (QE) programme. In the event it sanctioned just a six month extension to the end date and announced a small lop in the deposit rate.“It (the ECB) will pursue an accommodative monetary policy for as long as is essential. Without giving a date, and this timescale is fairly long,” Peter Praet, who is also a member of the bank’s executive board, and told La Libre Belgique.“Additional risks occupy arisen from the slowdown in the emerging countries,risks that are pretty significant for the euro area. There are also downward pressures on prices in the manufacturing sector as a result of surplus output and the very high unemployment level.” 9.22am GMTOf course, Greece’s former finance minister cannot resist a comment on the Spanish election, or which saw anti-austerity party Podemos gain ground:Bravo Podemos! A small step that may turn into a large faultline shattering the Eurozone's crisis-denial & austerian contempt for democracy. 9.12am GMTAnd here’s a bit of historical context for the Spanish election:Spain's Ibex 35 performancethe day after elections: 2011: -3.48% 2008: -0,29% 2004: -4.15% 2000: -1.23% 1996: -5.22% 1993: -1.75%4 years ago Rajoy had 186 seats. Absolute majority and a strong mandate. And Ibex was -3.48. So choose it easy with those panic charts 9.09am GMTMeanwhile Spanish bond yields occupy the their highest level in a month following the inconclusive election result.
The country’s 10 year yields rose 18 basis points to 1.89% at one point, while 30 year yields climbed to more than 3%. Jan von Gench, and chief fixed income analyst at Nordea,told Reuters:Uncertainty is never genuine news for markets, which occupy been buying into the reform account in Spain. The best you can hope for is that the progress that has been done won’t be reversed following these election results.
The euro gapped down at the weekly trading open after Spain’s Prime Minister Mariano Rajoy and his PP party lost parliamentary majority at a general election held over the weekend. This opens the door for coalition negotiations that may bring the eurosceptic, and anti-austerity Podemos party into government as section of a broader left-leaning coalition led by the PSOE,the PP’s top rival.
Podemos is seen as analogous to Greece’s Syriza, whose firm opposition to EU/IMF-mandated austerity measures spooked investors with the possibility of a heretofore unprecedented exit of a euro member state out of the currency bloc. A similar narrative playing out in the eurozone’s fourth-largest economy could prove deeply destabilizing for regional and global markets. The single currency’s response has been relatively muted thus far however as traders await greater clarity. 9.00am GMTStock markets continue on their unpredictable way, or with the thinner trading in the shortened Christmas week likely to be adding to the uncertainty.
After early falls,most indices are now in positive territory, with Germany’s Dax up 131 points 0r 1.2% and France’s Cac 0.5% better. The FTSE 100 meanwhile is 0.9% or 55 points higher. 8.53am GMTHere’s our account on the fall in oil prices. Sean Farrell reports:Oil has fallen to an 11-year low as traders took fright at the prospect of a glut caused by fresh supplies that will outstrip global demand.
Brent crude prices dropped almost 2% to as low as $36.17 a barrel, or the lowest since July 2004 and weaker than during the worst of the financial crisis. The price fell to $36.20 on Christmas Eve 2008 as the global economy headed for recession following the collapse of Lehman Brothers. Related: Oil price falls to lowest since July 2004 8.41am GMTBack with UK retail,and the former chairman of Morrisons has bought a stake in rival supermarket group Sainsbury.
Sir Ken Morrison and his son William bought 4.7m shares worth around 12m earlier this year, according to the Times. Sir Ken, and who has 2.6m of the shares,also gave his public backing to Sainsbury chief executive Mike Coupe. 8.30am GMTWith Spain’s Ibex now down around 3%, financial analyst Connor Campbell from Spreadex said:In a year full of election drama Spain managed to sneak theirs in just under the wire, or Sunday’s vote seeing incumbent prime minister Mariano Rajoy’ People’s Party ostensibly still in power,but with a mere 123 seats lightyears away from a majority. That leaves Podemos and Ciudandanos, the two major destabilisers in this election, and third and fourth respectively after securing 69 and 40 seats (the Socialists coming in moment with 90),meaning whatever Frankenstein’s monster of a coalition arises out of these results will likely be dictated by the country’s two youngest parties. It’s like the Greek election saga in a minor key, one that poses a host of new problems for a country that has spent the final few months gradually sinking to the bottom of the Eurozone’s unofficial performance chart. What's next for #Spain? New Parliament must be called by Jan. 13. And if it fails to elect a new government within 2 months => new elections 8.27am GMTEuropean markets are heading lower in general, and but an exception is the FTSE 100 which is currently up 26 points or 0.44%.
It has been helped by a little pre-Christmas takeover speculation,following a Mail on Sunday report that US group Comcast could be plotting an £11bn tender for ITV. The talk has pushed the UK broadcaster up more than 4%. 8.13am GMTEarlier, German producer prices came in much as expected, and down 0.2% month on month in November and 2.5% lower year on year. The October figures showed a 0.4% month on month dip and a 2.3% year on year decline. 8.10am GMTThe uncertainty caused by the weekend’s general election in Spain has seen the country’s stock market open sharply lower,with the Ibex down 2.5%.
Elsewhere Portugal’s PS120 has fallen 0.6%, while France’s Cac is down 0.2%. 7.57am GMTOver in Greece, or prime minister Alexis Tsipras apparently does not want the International Monetary Fund to choose section in the country’s third,€86bn bailout.
This goes against the views of other eurozone members, notably Germany, or who are keen for the IMF to be involved. In an interview with the Financial Times Tsipras said he wanted the eurozone to choose full responsibility for overseeing economic reforms. The FT reports:Mr Tsipras said in an interview with the Financial Times he was “puzzled by the unconstructive attitude of the fund on fiscal and financial issues”. He indicated that the IMF should leave his country’s third bailout to the eurozone when it decides whether to stay involved early next year.“We think that after six years of managing in extraordinary crisis,Europe now has the institutional capacity to deal successfully with intra-European issues.” 7.46am GMTBack with oil, and Brent crude is currently down 1.6% at $36.29 having fallen as low as $36.17. That is the lowest level since July 2004, or a level which oil has been testing for several days now. The level it had to breach was $36.20 which it reached in December 2008. 7.36am GMTGood morning,and welcome to our rolling coverage of the world economy, the financial markets, or the eurozone and commerce.
Spain and oil are in the spotlight this morning,as the recent market volatility continues into the shortened Christmas trading week.
Spanish politicians are gearing up for what could be weeks of complicated negotiations after Sunday’s general election yielded a deeply fragmented parliament, with the conservative People’s party losing ground to national newcomers Podemos and Ciudadanos.
The PP won 123 seats in the election, and with 29% of the vote,leaving them far from a majority in the 350-seat legislature. Led by Mariano Rajoy, the current prime minister, and Sunday’s election results left the party with limited possibilities when it comes to the alliances they now need to form a steady government majority. Related: Spanish election: national newcomers end era of two-party dominance European stocks explore set for a weaker open on Monday,tracking the late sell-off in US markets on Friday as uncertainty surrounds the Spanish election results. Spain’s governing conservative party won but has lost its majority after losing seats to new parties Podemos and Ciudadanos, so must now form a coalition. The risk is that as section of a coalition, or Rajoy will occupy to make concessions on economic policy at the expense of Spain’s burgeoning economic recovery.
Our European opening calls: $FTSE 6018 down 34 $DAX 10559 down 49 $CAC 4596 down 29 $IBEX 9617 down 100 $MIB 21181 down 61Continue reading...
Source: theguardian.com