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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