Spanish banks, utilities clobbered as election rattles investors
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Spanish blue-chip shares dropped Monday after a snap general election at the weekend yielded no clear winner, with investors punishing banks and utilities in particular.
Spain faced political gridlock on Monday after the right-wing parties failed to clinch a decisive victory and no clear winner emerged in Sunday’s national election, leaving Basque and Catalan small regional parties as potential kingmakers.
This outcome could ultimately lead to the extension of a windfall levy on the financial and energy sector beyond the current two-year period.”The generalised falls are due to the fact that the market is expecting either a weak government or an election ahead. Now a period of uncertainty is opening up, which is the worst possible scenario for the markets,” said Natalia Aguirre, head of analysis at Renta 4.
Madrid’s IBEX 35 equity benchmark index fell by as much as 1.8% in early trading, underperforming the broader STOXX 600, which fell 0.3%, while the euro held steady on the day at $1.1126.
The centre-right People’s Party (PP) and the far-right Vox won a combined 169 seats in parliament, while the ruling Socialists (PSOE) and far-left Sumar won 153, well short of the 176 seats needed for a majority.
