The Madrid stock market tumbled yesterday as investors, worried by a deepening Catalan independence crisis, offloaded their shares in a hurry.
Madrid’s main index, the Ibex, was down nearly 3% to 9,964.90 points at the close after falling below the key 10,000 level.
Across Europe, London’s FTSE 100 was flat at 7,467.58 at close; Frankfurt’s DAX 30 rose 0.5% at 12,955.89, while Paris’ CAC 40 fell 0.1% at 5,363.23.
“The eyes of the world are on Catalonia and the spike in political tensions is likely to keep investors away,” said David Madden, an analyst at CMC Markets.
The index has fallen to a level not seen since March, he added.
“Today’s focus has been relentlessly on the situation in Spain, where Catalonia is seemingly headed for a declaration of independence,” said Chris Beauchamp, chief market analyst at IG, summing up a black Wednesday for the Madrid market.
“As a result, the Ibex remains under heavy pressure, with the index now down 11% from its highs.”
Analysts said they detected a switch from Spanish equities into German stocks, a move that pushed the Frankfurt exchange higher and close to record peaks, bucking a Europe-wide lower trend.
Paris shares were slightly softer at the closing bell.
Across Europe, investors were held back by “ongoing jitters following the unofficial independence referendum in Catalonia,” NFS Macro analyst Nick Stamenkovic told AFP. “Spanish stocks, particularly banks have been the main casualty.”
Shares in key Spanish lenders were between 4% and more than 5% down by the end of trading.
London ended flat as traders brushed off a survey showing activity in the British services sector, a key driver of the UK economy, rebounded last month.
Britain’s domestic electricity and gas suppliers took a major hit after British Prime Minister Theresa May unveiled plans to cap household energy prices.
In reaction, British Gas parent company Centrica saw its share price tumble, topping the fallers board on London’s FTSE 100 index.
Shares in Scottish & Southern Energy also fell, as did other European energy providers with British operations, including EON and and nPower parent RWE, both listed in Frankfurt.
“Theresa May managed to struggle on through her speech to deliver another body blow to energy stocks as she said the government would push ahead with plans for an energy price cap,” noted ETX Capital analyst Neil Wilson.
In Milan, Pirelli shares fell on their first day of trading after the tyremaker made a skiddy stock exchange comeback.
Wall Street, meanwhile, had recovered from early weakness by late morning in New York, potentially headed for a fresh record closing high. The dollar fell across the board as attention began to focus on the likely make-up of the new US Federal Reserve board.