Spain’s Political Impasse Ends, Bonds Outperform Stocks

Spain’s benchmark stock index , which has shown resilience to months of political gridlock, was down 0.7 percent on Monday after lawmakers agreed to grant conservative leader Mariano Rajoy a second term as prime minister.

Spanish shares tracked a weak open across major European stocks, with banks the biggest drag on the IBEX.

Bonds slightly outperformed. Spain’s 10-year bond yield was steady on the day at 1.23 percent, while Portuguese yields rose about 1 basis point. Spanish yields have fallen in recent weeks as investors priced in an end to the political deadlock.

Spain’s IBEX share index was down 0.4 percent, with shares in Bankia, BBVA and Banco Santander were down 0.2 to 0.8 percent.

The index is down 5 percent this year, slightly outperforming the 7 percent decline for Europe’s STOXX 600, suggesting investors have largely shrugged off worries that political uncertainty would hurt prospects for Spanish firms.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell