The DAX has recorded losses in the Thursday session. Currently, the index is at 12,958.50 down 0.65% on the day. On the release front, there are no major indicators out of the eurozone. On Friday, Germany releases PPI and the eurozone will publish its current account surplus.
The Spanish stock market is down 1.0% on the day, and this has dragged down other European stock markets, including the DAX. The crisis over Catalan independence has worsened, as the Catalan government ignored a deadline to withdraw its independence bid, prompting Madrid to threaten it would impose direct control on the region on Saturday. Analysts continue to digest European corporate earnings for the third quarter, and the results will likely have a strong impact on the stock markets next week.
All eyes are on Spain, as investors are nervously monitoring the constitutional crisis in Catalonia. The Catalan government has refused to comply with a demand by Madrid to withdraw its declaration of independence, and the central government has responded harshly, saying it will invoke Article 155 of the Spanish Constitution and impose direct control over Catalonia. However, the government must first receive approval from the Senate before it implements this measure, and the Senate is expected to approve the move on Saturday. Madrid has said that it will not invoke this measure if the Catalan parliament calls new elections, but so far there has been no response from Catalan leaders. The deepening constitutional crisis has led hundreds of companies to start leaving Catalonia, and the Standard and Poor’s rating agency has said that the region could face a recession if the situation is not resolve. Investment projects are at a standstill in the region, and if the situation worsens, investors could get nervous and send the euro lower.
