Spanish Stocks Bounce as Catalonia Backs Down

European stock markets narrowly mixed but IBEX rallies. Most European markets moved sideways this morning, amid the lack of data releases and with investors waiting for the FOMC minutes and the wealth of central bank comments scheduled alongside the IMF and World Bank meetings. The Spanish IBEX is the notable exception and the index bounced back 1.20% after Catalonia’s leadership played for time and suspended the declaration of independence. The issue continues to hang over the Eurozone, but at least for now, Spanish stocks can take a breather. The Nikkei gained 0.28% after strong orders data and despite a stronger Yen. The Hang Seng retreated somewhat, but CSI 300 and ASX 200 also moved higher amid improved optimism about the world growth outlook after the IMF’s updated forecasts and as oil prices climbed above USD 51 per barrel.

Crude oil climbed further above USD 51 per barrel, as OPEC Secretary-General reiterated that a rapid market rebalancing is underway, citing improved momentum in the global economy and oil-destocking over the summer. Oil producers in the U.S. cut output by 59% because of Tropical Storm Nate, according to the Bureau of Safety and Environmental Enforcement. Saudi Arabia added to the bid tone as well, as it cut its November export allocations by 560k barrels per day.

Japan Machinery Order Rose

Japan’s core machinery orders rose for a second straight month in August, beating market expectations. Cabinet Office data showed on Wednesday that core orders, rose 3.4% month over month in August. Orders from manufacturers jumped 16.1% month over month in August, driven by general-purpose production machinery such as machine tools, while service-sector orders grew 3.1%, led by orders for boilers and turbines.

Puidgemont rather than unilaterally declaring independence proposed to suspend the result of the referendum and called for weeks of dialogue. Spain’s central administration had braced itself for a direct conflict, so this is at least a partial victory as Puidgemont seemed to back down first in this game of chicken. Still, with Catalonia suspending the result, rather than fully ignoring it Rajoy will likely still see this as blackmail and it remains to be seen whether he will now take a softer stance or continue to demand a full capitulation from the independent region.

China preparing first USD bond since 2004. The MoF said in a statement that it will sell USD 2 billion of notes as soon as this month, and is scheduled to meet with bankers in Beijing to discuss the deal that will add further weight to the booming offshore Asian debt market. China’s domestic debt market is now the world’s third largest and the USD bond will provide a new benchmark for pricing China’s state-owned enterprises.