ECB with countermeasures and Catalonia’s Independence | Calamatta Cuschieri

Markets in Europe closed flat to higher on Wednesday as investors continued to anticipate European Central Bank President Mario Draghi's speech set for later today. Meanwhile, investment incentives were also relatively low as independence referendum crisis in Catalonia continued with geopolitical uncertainty looming in Europe. Utility sector was the worst performer following UK Prime Minister Theresa May's remarks on energy bills. 

German DAX gained 0.53% at the end of the trading session. In London, the FTSE 100 closed almost flat, adding 0.04%. French CAC 40 ended trade 0.08% lower. 

On Wall Street, major stock indexes traded mostly lower, recording relatively small changes, as investors take a pause from back-to-back strong sessions.

The Dow Jones Industrial Average index increased helped by Caterpillar, Nike and Johnson & Johnson. On the other hand the Nasdaq 100 was not facilitated by Micron Technology as the company underperformed with a loss of around 2%.

Oil production cut

Speaking during the Russian Energy forum in Moscow, Russian President Vladimir Putin stated that if the OPEC and non-OPEC countries agree to extend the deal to cut oil output they reached in December 2016, it should last at least until the end of 2018. He also added that he still doesn't know if the deal is going to be extended at all, but if the parties agree on it, the minimum timeframe he is ready to discuss is the end of next year.

Russia not being part of OPEC, will continue to work with OPEC countries and other major oil producers on a voluntary but mutual beneficial basis in order to stabilise the global oil market.

ECB with new measures for Bad Debts

The European Central Bank is planning to introduce new countermeasures against the bad debt by pressing the Eurozone banks to set aside more cash for bad debt. The banks are to set aside the funds needed to cover 100% of the new non-performing loans (NPLs) within the two years starting January 2018.

The new procedures are not there to solve the issue of already existing debt of €1 trillion but to put a stop to creating a new one. The banks failing to comply with the new regulations could face a sanction.

Catalonia Independence plans

The Catalan parliament may trigger the process of separation from Spain and declare independence of the region on October 9. The reports came after Catalonia's President Carles Puigdemont stated that the region will declare independence in the next few days after a successful referendum held on Sunday. Mr Puigdemont said regional officials would "act at the end of this week or the beginning of the next." 

Following the contentious referendum on Sunday, the European Commission branded the happenings as "illegal" and unconstitutional, and warned that if Catalonia breaks away from Spain, it would be quitting the European Union as well. 

Disclaimer: This article was issued by Rodrick Duca, Trader 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 Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.