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Spanish market hit by Catalan crisis

The FTSE 100’s positive run continues as the index has set another record high this morning.

Consumer stocks are in high demand as the Santa rally gets under way, Next, Burberry, and Associated British Foods are all higher on the session.

The IBEX 35 is firmly in the red after the Catalan nationalists secured a majority of seats in the regional election. This won’t necessarily set Catalonia on a path to holding a legally binding referendum on independence, but it could at least start the conversation about one. This result will be a torn in the side of the Madrid administration as it keep the independence issue on the table. While the political uncertainty hangs over Catalonia, investors will be looking to steer clear of Spanish stocks.

GBP/USD was given a boost by the better than expected third-quarter growth figures. On a yearly basis the British economy grew by 1.7%, comfortably beating the 1.5% growth expected and the previous reading was upped from 1.5% to 1.9%.

EUR/USD has been hit by the Catalan separatists win in the regional elections in the region. The victory for the Catalan nationalists could reignite the topic of independence in the country. On a wider view, the surge in Catalan nationalism could encourage other movements in the eurozone. The Italian regions of Veneto and Lombardy voted for greater autonomy in October, and we could see more od this across Europe.  

At 1.30pm (UK time) the US will announce the core personal consumption expenditure (PCE) index and economists are expecting the level to tick up to 1.5% from 1.4%. The PCE index is the preferred inflation measure of the Federal Reserve so traders will be paying close attention to the report. The cost of living in the US has been ticking up, but it hasn’t been rising as fast as the Fed would like.  

We are expecting the Dow Jones to open up 13 points at 24,795, and we are calling the S&P 500 up 2 points at 2687.


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