- Albert Gea/Reuters
LONDON – Spain’s stock market is taking a pounding on Wednesday as tensions in Catalonia boil over, and the region’s leaders draw closer to declaring independence from the rest of the country.
Spain’s benchmark index, the IBEX 35, has fallen more than 2% and dropped below 10,000 points for the first time since mid-2015.
It follows Catalonia’s leader Carles Puigdemont saying that the region will declare independence from Spain within days.
“We’re going to declare independence 48 hours after all the official results are counted,” he said, according to a BBC translation.
“This will probably finish when we have the votes in from abroad at the end of the week, and therefore we will act over the weekend or early next week.”
Puigdemont’s comments came as Spain’s king made a rare intervention in the country’s politics. King Felipe VI gave a televised address to the nation on Tuesday evening, saying that Catalan authorities “have placed themselves outside the law and democracy, they have tried to break the unity of Spain and national sovereignty.
It is the “responsibility of the legitimate powers of the state to ensure the constitutional order,” he added.
Catalonia on Sunday held an independence referendum, with about 90% of voters backing a split from the rest of the country. Turnout was 43%.
Spain’s central government does not recognise the vote as legitimate and it has been condemned as illegal by the European Commission.
Jasper Lawler, head of research at London Capital Group said in an email: “Spanish politics is acting as a drag on the positive read-across from the record highs on Wall Street. The resolve of regional officials in Catalonia to announce independence from Spain has caught markets off-guard.”
“Given their turbulent history and strong ties to the economy, short-sellers will target Spanish banks during any political instability involving Catalonia,” he added. The IBEX’s biggest fallers include Caixabank (down 6.8%), Banco Sabadell (down 6.3%), Bankia (down 4.2%), and BBVA (down 3.63%.)
Here’s the IBEX-wide chart soon after 12.30 p.m. BST (7.30 a.m. ET):