Spain: Politics in focus – Danske Bank

Senior Analyst, Kristoffer Kjær Lomholt at Danske Bank, explains that it has been fairly quiet overnight and suggests that the market focus this morning is on Spain, as the regional elections in Catalonia showed a win for the pro-independence parties, with the three separatist groups winning a majority with 70 seats (68 needed).

Key Quotes

“The result is a big blow to Prime Minister Mariano Rajoy’s effort to contain the independence movement when he triggered Article 155 in October. Also, Rajoy’s People’s Party lost eight of its 11 seats, with unionists turning to Ciudadanos, which became the party most voted. The vote leaves political uncertainty as a continued market theme in Spain. Yet, the separatists’ democratic mandate to leave the rest of Spain remains weak. Market reaction has been fairly muted, with EUR/USD trading 25 pips lower. SPGBs are likely to suffer today but we doubt this will last long.”