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Stock markets in Europe are relatively quiet after the US government voted in favour of introducing $1.5 trillion tax reform yesterday. 

The long-awaited tax reforms had ramped up bullish sentiment over the past few months, and now traders are running out of reasons to keep buying. The timing of the tax reform, just before Christmas, could also explain the lack of buying momentum as dealers are winding down their positions.

The IBEX 35 is fractionally lower as the Catalan regional elections take place today. The polls are pointing to a hung parliament and that is why the Spanish market hasn’t moved much, but should the pro-independence party gain a majority a sell-off is likely.  

McCarthy & Stone shares are down 8.7% after the government outlined plans to ban the sale of new leasehold homes. Clive Fenton, the CEO of McCarthy & Stone stated the ‘proposal to set all ground rents to zero will result in a disruption of housing supply’. The homebuilder expects to make £33 million next year from freehold reversion sales. The share price fell to a three month low on the back of the announcement, and if the selling pressure continues it could fall to 140p.

GBP/USD is largely unchanged on the day as volatility is low. Trend line support from the March low could come in to play in the 1.3300 region, and while it remains above that area, the outlook is likely to remain bullish. UK public sector borrowing came in at £8.11 billion in November, but the October report was revised lower from £7.46 billion to £7.24 billion.

EUR/USD hit a two week high yesterday and even though it hasn’t cleared yesterday’s peak it is still in an upward trend. We are not expecting any major economic announcements from the eurozone today, but traders will be keeping an eye out for the US growth figures, especially seeing as the US dollar has been weak recently.   

At 1.30pm (UK time) the US will announce the final reading of third-quarter GDP, and the consensus is for a reading of 3.3%, up from 3.1% in the previous report.

We are expecting the Dow Jones to open down 2 points at 24,724, and we are calling the S&P 500 flat at 2679.

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