The Catalan government has been given five days to make a decision in relation to independence.

Europe

The Catalan President, Carles Puigdemont gave a vague update earlier this week, and traders will be wondering what his next move will be. The Madrid government could impose direct rule on the region but that might play into the hands of the Catalan separatists. The IBEX 35 is still in the downward trend it has been in since May, and even though volatility has cooled, investor confidence is still lacking. 

The FTSE 100 hit its highest level since early June. The bullish move was achieved for the wrong reasons, as the dip in the pound on the back of the stalled Brexit talks helped the British index.

Shares Booker Group are down 0.3% on the day after the company issued a decent set of first-half numbers. The wholesaler and operator of convenience stores posted a 9% increase in pre-tax profits, while revenue rose by 2.5%. The interim dividend was raised by 10%. These are respectable figures for a company operating in the retail sector.  The company stated it expects the merger with Tesco will to be finished early next year. On account of proposed tie-up between the companies, Booker Group won’t be issuing any forward guidance’s. Booker Groups stock has risen approximately 76% over the past three years, which easily beats the performance of Marks & Spencer, Sainsbury’s and Tesco.

Shares in Just Eat hit a record high today after the competition and markets authority (CMA) provisionally approved their takeover of rival Hungry House. The regulator stated that the resultant takeover won’t cause competition issues because Hungry House has a comparatively small market share.  

US

The Dow Jones and the S&P 500 are slightly lower on the day as traders book their profits from the recent impressive rally. The beginning of reporting season has given traders an excuse to take some fund off the table.

JP Morgan posted third-quarter earnings per share (EPS) of $1.76 and revenue of $26.2 billion, while analysts were expecting $1.65 and $25.23 billion respectively. The bank saw trading revenue dip by 21%, a touch worse than the 20% drop that they forecasted. Fixed income trading dropped by 27%, and that metric has been a major theme of previous reporting seasons for banks. JP Morgan saw their net interest income jump by $1.2 billion, and that was assisted by their spike in deposits and continued growth in loans. Deriving more income from the retail banking business isn’t as exciting as the investment banking operation, but it’s a more stable industry. The share price is down 0.8% today but the trend is still positive.

Citigroup revealed third-quarter EPS of $1.42, while analysts were expecting $1.32. Revenue was $18.17 billion and the consensus was for $17.89 billion. Earnings from bond trading was 16% - in line with their forecast, while revenue from equity dealing jumped by 16%, but the equity division is a smaller part of the business. The retail banking division is growing, in particular in North America. The stock hit a record high just after the open of trading, so the sentiment is clearly bullish.

US core producer price index (PPI) on year rose to 2.2% from 2%, and analysts were expecting it to remain on hold. The pick-up in PPI points to growing demand, and Federal Reserve update last night suggested an interest rate hike in December.

FX

GBP/USD came under pressure as the Brexit negations came to a deadlock. Michel Barnier, the chief EU negotiator stated the talks didn’t make enough progress to move onto the next stage. This put the pound under pressure as traders are very sensitive to the UK’s exit from the EU. There was no major economic announcements from the UK today so the slight prospect of the UK leaving the EU and resorting to world trade organisation (WTO) trade rules sent sterling lower.

EUR/USD is lower on the session as an increase in the growth rate of US PPI gave a broad rally to the US dollar. Eurozone industrial production in August jumped by 3.8% on the year, but traders shrugged it off. Jerome Powell, of the Federal Reserve, stated that US interest rate hikes should continue to be gradual, as long as the economy keeps growing as expected. 

Commodities

Gold is in positive territory even though it has pulled back a little due to the strength of the US dollar. The metal has been pushing higher for nearly one week ,and seeing as the Fed don’t seem to be overly hawkish when it comes to their 2018 outlook, we could see the wider upward trend continue

WTI and Brent Crude oil were in decline throughout the way and the energy information administration (EIA) inventory figures added to the decline. Oil inventories fell by 2.74 million barrels, and the consensus was for a drop of 2.35 million barrels. It was the unexpected increase of gasoline that weighed on the energy market. Inventories rose by 2.49 million barrels and  the consensus was for a drop of 120,000 barrels.

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