Catalonia result knocks European equities

A new record for the FTSE 100 contrasts with weakness in Europe following the Catalonia result.

The FTSE 100 is finishing in suitably festive fashion, having carved out a new record high this morning. Meanwhile in Europe the atmosphere is less convivial, as risk assets take a knock following the Separatists’ narrow victory in the Catalonia poll yesterday. 2017 saw a number of political risk events, but none have been quite as interesting or as durable as the Catalonian issue. This, perhaps more than Brexit, threatens to be the problem to watch in 2018.  European stocks have not managed to outperform their US counterparts in 2017, instead lagging by about 50%. Once again following the crowd into European markets did not produce the expected stellar return, but a 14% return is still not to be sniffed at.

Next week promises to be a quiet one, as the corporate calendar dries up and the economic schedule is quite bereft. Now tax reform is out of the way, the last question for the year is, will the Dow hit 25K? At present, it seems unwilling to move higher, but given the light volumes of next week there is still a chance to pull one more rabbit from the hat.