Political sentiment in Italy has boosted investor sentiment in Europe. 

The political deadlock in Italy has been broken as the Five Star Movement and the League Party have agreed to form a coalition. The Italian president recently blocked the appointment of Paolo Savona as finance minister, and as a compromise Mr Savona will become european affairs minister. The mood has turned positive, but as the parties still hold anti-establishment polices, this upward move might be short-lived.

Struggling Spanish prime minister Mariano Rajoy announced that Pedro Sanchez will replace him. There has been mounting pressure on Mr Rajoy recently, and it appears that Spain will avoid a general election. The IBEX 35 received an extra boost on the back of this as some political stability has been restored.

Investors have shrugged off the US decision to impose tariffs on steel and aluminium from the EU. Car manufacturers like BMW, Volkswagen and Daimler are all higher this morning after finishing lower yesterday. 

Shares in Dignity sold-off sharply this morning after the regulator confirmed it is contemplating introducing stricter rules on the sector. The government announced it was ‘appalled’ by some of the terms of business. The review into the industry will look at how prices have changed over time, and ensuring that is it easy for clients to select the option that suits their needs. The stock has been in a downtrend since October 2016, and if the negative move continues it might target 900p.

Barratt Development shares are up 2.2% after JPMorgan raised the stock to overweight from neutral. 

There has been little movement in EUR/USD and GBP/USD ahead of the US jobs report. There were several manufacturing PMI reports released today, and eurozone countries like Spain, Italy and France all released figures that missed economists’ expectations. The UK manufacturing report came in at 54.4, comfortably topping the forecast of 53.5.

At 1.30pm (UK time) the US non-farm payrolls report is released and the consensus estimates is 188,000, which would be an improvement on April’s 164,000. The unemployment rate is expected to remain steady at 3.9%, while the yearly average earnings rate is anticipated to be 2.7%.

We are expecting the Dow Jones to open up 85 points at 24,500 and we are calling the S&P 500 up 10 points at 2,715.

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