EUR gains should be limited from here as the market awaits the Catalan president Puigdemont's key address to regional Parliament tonight, which we believe will be at 6.00pmEuropean (Central) time.
All fears are on whether he declares a unilateral declaration of independence, which will spark a response from Madrid from PM Rajoy to force direct control on the region. Going against the decision to break free are the announced plans by high profile companies to relocate from the region - to Madrid - and this will no doubt question some of the sentiment in the 'referendum result' which although 90% in favour, was based on a turnout of 43%.
Infrastructure firm Abertis (LON:0NWD), SEAT and telecoms company Cellnex (MC:CLNX) are among the big names, while in banking, Banco Sabadell (LON:0H00) and Caixabank (LON:0ILK) have also 'made plans'. Naturally, the rest of Europe have called for unity, but in light of what we saw the weekend before last, it is the manner in which resolution will be reached.
Fragmentation in any of the key member states is a body blow for the euro area, at a time when the economic outlook is so positive -indeed, with Spanish employment figures improving dramatically. Looking further ahead, we continue to keep the Italian elections next year in the background, with populism and now separatism all undermining the growth prospects and naturally unity itself - something which has been under threat from the start due to the effective 'one policy fits all' argument.
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