Global stock markets ended a record-breaking run yesterday as corporate earnings, economic data and political woes cast doubt on the rally’s sustainability, dealers said.
Europe’s stock markets slid in response to Spain’s escalating political crisis, while investors awaited news from an EU summit where Brexit will once again be the focus of attention.
The Madrid stock exchange under-performed its European peers, as banking stocks dropped sharply, but weakness also extended into the industrial sector.
Madrid’s IBEX 35 closed 0.7% down at 10,197.5 points, London’s FTSE 100, 0.3% down at 7,523.04 points, Frankfurt’s DAX 30, 0.4% down at 12,990.10 points, Paris’ CAC 40, 0.3% down at 5,368.29 points and the EURO STOXX 50 ended 0.5% down at 3,602.08 points.
Wall Street was lower approaching midday in New York after a new all-time high reached on Wednesday, but remained comfortably above the key 23,000 level it breached this week for the first time.
“Mixed global economic and earnings data, along with lingering political and monetary policy concerns are conspiring to stymie the rally,” said analysts at the Charles Schwab brokerage.
European stock markets were “firmly on the back foot as a raft of company report earnings missed expectations, while investors await the next steps with respect to the constitutional crisis in Spain and today’s EU summit in Brussels”, noted Michael Hewson, chief market analyst at CMC Markets UK.
Spain said it would press ahead with suspending Catalonia’s autonomy after the region’s leader warned he may declare independence, heralding an unprecedented escalation of the country’s worst political crisis in decades.
The prolonged uncertainty is taking a toll on one of Spain’s most important regional economies.
More than 800 companies have moved their legal headquarters out of Catalonia, citing the risk of instability.
The national government has cut its growth forecast for next year to 2.3%, from 2.6%, blaming the current crisis.
Traders were looking also to Brussels, as EU President Donald Tusk warned Britain not to expect any breakthrough in Brexit negotiations at a European summit starting Thursday, saying London needed to come up with more concrete proposals.
Leaders of the other 27 EU members meeting in Brussels through to today are set to postpone until at least December a decision on whether enough progress has been made in talks to move on to discussing Britain and the EU’s future relationship.
More cracks have been appearing in Britain’s economy, and data yesterday showed that retail sales fell more than expected in September, against a backdrop of rising inflation largely caused by a Brexit-hit pound.
Oil prices were weaker, but off the day’s lows after Opec secretary general Mohammed Barkindo said that “there is no doubt that the market is rebalancing at an accelerating pace”.
A view of the Madrid Stock Exchange. The IBEX 35 closed 0.7% down at 10,197.5 points yesterday.
