DAX Unchanged as Catalonia Suspends Independence Proclamation

The DAX is showing little movement in the Wednesday session. Currently, the index is at 12,953.00, up 0.03% on the day. There are no eurozone or German indicators on the schedule, but the markets will be busy digesting events in Catalonia.

All eyes were on Catalonia on Tuesday, as President Carles Puigdemont addressed the Catalan parliament. Puigdemont and other regional lawmakers signed a proclamation of “full sovereignty” for Catalonia, but the Catalan leader immediately qualified the move, saying that no formal steps would be taken before talks were held with the Spanish government. The Catalan leader was under huge pressure not to make any irreversible moves, as Madrid warned it would not tolerate any unilateral moves, and the European Union also urged dialogue between the parties. Investors are relieved that Puigdemont has suspended independence for now, but the crisis is by no means over. The Spanish government continues its hard line towards any attempt at secession by Catalonia, saying it refuses to discuss the issue. Although Catalan leaders say they have a mandate for independence based on the referendum (in which 90% voted for independence), Catalans are deeply divided over the issue. Several banks and major companies have announced they will move their legal headquarters from Barcelona to Madrid, and the constitutional crisis could take a toll on the Spanish economy if the stalemate continues. The EU has said that Catalonia’s drive for independence is a domestic Spanish issue, and so far the euro and German stock markets have not been affected by the crisis.

Germany’s economy has performed well in 2017, and third quarter numbers continue to point upwards. There was positive news on Tuesday, as the trade surplus hit a 12-month high. Manufacturing numbers have impressed, as Industrial Production surged 2.7%, the second-highest gain in 2017. Last week, Factory Orders gained 3.6%, its best performance since December 2016. Strong global demand for German goods, in particular automobiles, has been a boon for German industrial and manufacturing output. September PMIs were also solid, as the services and manufacturing sectors continue to show expansion. It could be smooth sailing for the robust Germany economy, with projections that the economy will expand 1.9% in 2017 and 2.0% in 2018. Later on Wednesday, the German government will release its forecast for GDP growth, as well as employment and inflation forecasts.

Europe Higher as Catalans Seek Talks With Madrid

Economic Calendar

Wednesday (October 11)

• There are no eurozone or German events

DAX, Wednesday, October 11 at 5:40 EDT

Open: 12,966.25 High: 12,947.00 Low: 12,971.50 Close: 12,953.00

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