By Geoffrey Smith
Investing.com — The bad news in Europe’s stock markets after early trading in Monday is that Spain’s stock market doesn’t like its election result.
The good news is that it doesn’t matter.
The has fallen on every Monday after an election since 1993, according to this intriguing table unearthed by independent fixed-income analyst Luis Benguerel on Twitter.
Fair’s fair – markets generally don’t like an inconclusive election, but that is the only kind of election that Europe is producing at the moment, and it was entirely in line with opinion polls ahead of the event. The result, which will probably see milk-and-water Socialist leader Pedro Sanchez stay at the head of a minority government, constrained from rocking the boat too hard with irresponsible budgets, is far from the worst imaginable.
That said, the collapse of the center-right Partido Popular’s vote suggests it will be some time before Spain gets a government that is naturally sympathetic to business.
The bottom line, as Benguerel’s table shows, is that the IBEX’s 0.6% drop this morning is a knee-jerk and it has a nearly 50-50 chance of unwinding over the next four days.
All other major indexes were following Asia higher, preferring to focus on the positive elements of the U.S. GDP report on Friday. The benchmark was up 0.2% at 391.64, a little off its opening high. Germany’s was up 0.5%, while the U.K. was up 0.2%.
Elsewhere Monday, the most eye-catching development was with German chemical giant Bayer (DE:) after an unprecedented shareholder revolt against CEO Werner Baumann and the rest of the management board at a shareholder meeting on Friday
Over 55% of shareholders voted not to endorse the board’s performance in protest at the destruction of billions of dollars of shareholder value with the ill-judged acquisition of Monsanto (NYSE:).
However, Bayer’s supervisory board, which notionally exists to serve the interests of all stakeholders, not just shareholders, chose to ignore the vote and stood by Baumann.
The truly interesting thing here is that the 2% drop this morning in Bayer’s stock price is entirely accounted for by the share going ex-dividend. Were it not for that, the stock would actually be up.
That still doesn’t change the fact that it’s the 2nd-worst performing stock in the Dax over the last 12 months, having lost 38%. But if such cavalier treatment of shareholders can’t push the share price any lower, it’s tempting to wonder what would.
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