Market commentary: Spanish stocks trade lower after election

European Stocks opened lower on Monday, following Asia as the continuing oil saga and Spanish elections did not help to improve market sentiment. Oil is trading at levels lower than those experienced in 2008 as production is at its highest and there is no clear sign yet that supply is slowing down.

In Spain, stocks on the IBEX 35 traded lower as the People’s Party failed to get a majority and a clear mandate to govern despite being able to win most of the votes. This political governance dilemma put pressure on Spanish bank stocks as they were seen trading significantly lower.

Today no major earnings are expected out of the Eurozone, with the only significant economic indicator being the Purchasing Manager Index (PMI) for the euro zone.  The Purchasing Manager Index for the Eurozone declined by 0.2% on a month on month basis, which is in line with expectations.

Following sharp losses on Friday in the United States, Asian shares traded mixed during Monday’s session. Even though oil continued its downward trend there was advancement in energy shares on the hope that oil prices are reaching a bottom. This might not be an ideal time to get an indication of oil prices going forward, given the lack of liquidity during these times due to the festive season.

US stocks did not have their best session on Friday as indices closed sharply lower whilst the market continues to digest the decision by the Federal Reserve to raise interest rates on Wednesday. The latter decision has removed a lot of uncertainty from the market but now analysts are focusing their attention as to how the rise in interest rates will effect earnings going forward.

As at the time of writing, that is mid-morning today, the FTSE MIB was the highest riser on a year to date basis, with the Italian composite gaining 12.55% in Euro Terms. In Europe, this was followed by the DAX which registered 9.87% on a year to date basis.

Out of the US, only the NASDAQ is trading in the green in USD terms (at 3.95% as at time of writing) with the Dow Jones and the S&P 500 now in the red at 3.90% and 2.59% lower, in USD terms, respectively. For Euro investors, these declines might have been cancelled off given that the USD increased by more than 11% year to date.

This article was issued by Darin Pace, Treasury Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.