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Markets take break from record-setting | Calamatta Cuschieri

Correcting markets, Goldman’s contingency plans & Spain toughening up on Catalonia

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Calamatta Cuschieri
20 October 2017, 10:12am
Goldman Sachs boss Lloyd Blankfein has delivered a hint that Frankfurt will become a key European base for the Wall Street giant post-Brexit
Goldman Sachs boss Lloyd Blankfein has delivered a hint that Frankfurt will become a key European base for the Wall Street giant post-Brexit
US Stocks corrected from recent record highs on Thursday with disappointing corporate earnings and a report that Apple Inc. was dialing back its orders reversing the sentiment that sent benchmark gauges to record highs the day before. The Dow Jones Industrial Average declined 50 points, or 0.2%, to 23,107, coming off its lows of the session. The S&P 500 index fell 5 points, or 0.2%, to 2,555, with 7 of its 11 main sectors trading lower. Technology stocks were hardest hit, down 0.7%. The Nasdaq Composite Index slumped 35 points, or 0.5%, to 6,589.

An escalation of political tensions in Spain, a clutch of disappointing corporate updates and concerns about growth in China prompted investors to yank European stocks to their lowest close in nearly three weeks. U.K. stocks finished lower, stuck in the red after British retail sales data fell short of expectations, while shares of Unilever PLC dropped by the most in nine months following the consumer products heavyweight’s earnings report.

Frankfurt on Goldman’s radar

Goldman Sachs boss Lloyd Blankfein has delivered a hint that Frankfurt will become a key European base for the Wall Street giant post-Brexit. Earlier this month, the Wall Street bank said it had agreed to lease office space at a new building in Frankfurt giving it space for up to 1,000 staff; that would be five times the current staff of 200 and see the Wall Street giant bolstering activities including trading, investment banking and asset management.

Banks are particularly worried that UK will fail to strike an EU trade deal. Several international banks, insurers and asset managers are preparing to shift portions of their UK operations to the continent in preparation for Britain's divorce from the EU. Mr Blankfein, in Germany for what a Goldman spokesman said were "client meetings", is no fan of Brexit. He warned that it would "stall" the City of London's development and could even erode its position as a global financial centre.

Spain to regain control over Catalonia

Spanish stocks and bonds dropped as Prime Minister Mariano Rajoy’s national government said it will move forward with the process of suspending the powers of the Catalan administration after regional President Carles Puigdemont refused to shelve his claim to independence. Spain’s government issued a statement on Thursday morning invoking Article 155 of the Constitution “to restore the legality” of the semi-autonomous region.

Article 155 of the 1978 Constitution allows the central government to force any of its 17 regions to adhere to the law when disobedience “gravely threatens the general interest of Spain.” Its two short sentences appear to give the central government a broad remit to bring a rebellious region to heel, but because it’s never been written into law, there’s no roadmap for action, or clear path to avoid delays and battles with opposition parties in the Senate.

 

 

Disclaimer

This article was issued by Peter Petrov, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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