The third quarter of 2018 ended with falls, following the market rally at the start of the year which was buoyed by confidence stemming from the positive impact of the tax reform approved in the US and the easing of political risk between the US and North Korea.

The positive backdrop dissipated as the year progressed, increasing stock market volatility mainly as a result of:

• The political and economic instability in Italy and Brazil. In Italy's case, this was due to the make-up of the government and the presentation of a budget deficit target that breaches Brussels' rules. In the case of Brazil, the uncertainty stemmed from October's presidential elections.
• The failure to reach agreement in the Brexit negotiations.
• The ramping-up of trade tensions caused by the US's imposition of protectionist measures and their potential impact on confidence and the global economy.
• The rise in financial tensions in emerging economies due to the appreciation of the dollar, with a marked on impact currencies such as the Turkish lira, the Brazilian real and the Mexican peso, after the Fed and the ECB continued with their policy of monetary normalisation. The former twice increased interest rates (by 50 basis points in total), with the possibility of a third hike in December. The latter announced the end of quantitative easing, with a first interest rate hike forecast after summer 2019.

Against this backdrop, the leading share indices and the Santander share price ended the third quarter of 2018 down. Santander share price (-20.9%), Euro Stoxx Banks (-18.3%), Stoxx Banks (-14.8%), Ibex 35 (-6.5%), DJ Stoxx 50 (- 3.5%) and MSCI World Banks (- 8.3%).

On 28 December, Banco Santander was the number one bank in the euro area and the eighteenth-largest bank in the world by market cap – at EUR 69,958.3 billion.

Its stock weightings in the DJ Stoxx 50 and DJ Stoxx Banks stood at 1.92% and 7.3%, respectively. On the Spanish market, its weighting was 14.5% in the Ibex 35 index.

In the first nine months of the year, 15,856 billion Santander shares were traded, with a cash value of EUR 82,229 billion, the highest volume of any EuroStoxx security, with a liquidity ratio of 98%. 83 million shares were traded daily, for a cash amount of EUR 431 million.

Source: Bloomberg and Madrid Stock Exchange at 28/09/2018.