The IBEX 35 has gained the most ground in Europe today after Catalonia suspended its independence declaration yesterday. 

Europe

The stalemate between the region and the Spanish government is still ongoing, but the news that the region isn’t rushing for the exit has lifted investor confidence. We don’t have any clarity as to how the situation will develop from here, but at least the market can be confident of political stability in the country. Dealers may become nervous again when the separatists try and pursue their agenda, but at the moment normality has returned to the Spanish market.

Dunelm announced a 24.8% rise in first-quarter revenue, and like-for-like (LFL) sales jumped by 9.3%.  The company stated it will continue to ‘outperform’ within the industry, and the market welcomed the comments as others is the retail sector have been finding trading challenging. The share price is up 5.8%.

Shares in Provident Financial are down 5.3% after Barclays cut its rating on the stock to underweight from equal weight, and they lowered their target to 584p from 600p. The company issued two profit warnings over the summer which sent the stock tumbling, and the share price has been trapped in a small trading range since September – so the outlook still isn’t great.

US

The Dow Jones and S&P 500 are largely unchanged and both indices are within sight of their all-time highs, and trading ranges are low as dealers await the update from the US central bank later.

The Federal Reserve will publish the minutes for September’s meeting at 7pm tonight. Last month the US central bank announced the plans start reducing their balance sheet by $10 billion per month, and the plan is start trimming by are amount as time goes on. The unwinding of the balance sheet was expected and it’s a sign the US economy is strong enough to operate will less assistance. Interest rates were kept on hold at the meeting, and the Fed admitted they couldn’t explain why inflation is relatively weak. Traders will be trying to decipher the language and figure out if the bank will hike interest rates in December.

The respectable spike higher in US average earnings in last week non-farm payrolls report, could trickle down to an in increase in consumer spending, and in turn a rise in inflation.

The latest job openings and labour turnover summary (JOLTS) came in at 6.08 million, while traders were expecting a reading of 6.12 million. The July report was revised down to 6.14 million from 6.17 million. It was broadly a decent report, it is largely in-line with performance of the US economy.

Shares in Blackrock registered a new record-high shortly after the opening bell, but then turned lower due to profit taking. The asset manager had a strong set of third-quarter results, as earnings per share (EPS), revenue, assets under management and net inflows all topped analysts’ expectations The stock has been in a solid upward trend since early 2016, and on the back of today’s results we could see buyers enter the fold.  

FX

EUR/USD has befitted from the weakness in the US dollar, as traders are locking in their profits on the US dollar. The greenback is taking a breather after a positive run for a few weeks. The cooling of tensions in Catalonia is playing a secondary role in the euro’s rise today. Due to the lack of economic announcements from the eurozone, traders don’t have much to latch onto.

GBP/USD is slightly softer as the pounds push higher since Friday is running out of steam. There were no major economic announcements from the UK today and the only big report from the US was the JOLTS reports so volatility has been low.  

Commodities

Gold is largely unchanged on the day as the bounce back from Friday’s has stalled. The metal is very sensitive to changes in perception of the Federal Reserve’s monetary policy, and traders will be keeping an eye out for the Fed minutes. The decline in the US dollar recently is assisting the asset. Gold would needs to clear its 50-day moving average at $1297 before traders would be confident of a continuation of the wider positive move.

WTI and Brent Crude oil has slipped even though OPEC raised its demand forecast for 2018 again. The organisation has increased its demand forecast for three months in a row. The upward revision to demand come a few days after the cartel hinted it would keep production oil in check.  

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