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The IBEX 35 has bounced back after suffering heavy losses in the previous three sessions. 

The stand-off between Catalonia and Madrid is still ongoing, so today’s positive move shouldn’t be viewed as a sign that the relations are improving. The bounce back is most likely driven by short covering or bargain hunting. Madrid has warned Catalonia that direct rule may be imposed, and such a move is likely to stoke tensions even further.

The rest of Europe is relatively quiet, the FTSE 100 hit its highest level in nearly two months and the DAX is fractionally lower after posting a record-high yesterday.

Shares in DFS Furniture are down 4.2% after the company posted a 22% drop in annual profits. The announcement was hardly a surprise after the company warned on profits in June – which sent the stock tumbling. The company’s gearing ratio ticked higher, and the special dividend will also put pressure on their cash position. DFS described the environment as ‘very challenging’ – which investors should take heed of.

EUR/USD has gained a small bit of ground today and the rise in eurozone retail PMI to 52.3 in September from 50.8 in August is an encouraging sign.

GBP/USD is lower on the session as traders were questioning how long Theresa May will be in the top job. Downing Street declared that resignation is not an issue for Mrs May. The fact the government had to make that statement says a lot. 

Ian McCafferty and Andy Haldane of the Bank of England will be making speeches at 5pm and 6.30pm respectively. Both have a track record of hawkish language.

We are expecting the Dow Jones to open 5 points lower at 22,656, and we are calling the S&P 500 flat at 2537.

Federal Reserve members Jerome Powell and Patrick Harker are due to speak at 2.10pm and 3pm respectively.

Costco Wholesale will announce their fourth-quarter figures today.

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