U.S. equity markets are on course to open marginally higher on the final trading day before the Christmas break, with investors seemingly buoyed by not only the passage of tax reform through Congress but also efforts to delay a government shutdown until 19 January.
There’s been some speculation that Donald Trump may sign that tax reform bill today, which will complete the formalities, although I think it’s clear that any near term benefit for markets is now priced in. Friday is likely to be a little thin from a trading perspective, despite the fact that we will get income, spending and inflation data from the US, as well as new home sales, durable goods orders and consumer sentiment.
Catalans give Independence Parties slight majority
The Spanish IBEX is underperforming its peers this morning while Spanish yields have ticked higher after the Catalan election failed to ease the problems in the region, as separatist parties sealed a small majority. To compound the issue further, Mariano Rajoy’s People’s Party was decimated at the polls, dropping eight seats to leave it with only three in the 135-seat Catalan assembly. Rajoy’s next steps will be crucial, with the Spanish leader potentially now being forced into talks with the separatist groups in order to find a solution that appeases all concerned.
Bitcoin tumbles again, but buyers putting up a fight
Bitcoin is trading in the red again on Friday and is headed for a sixth day of losses on the Bitstamp exchange, something we haven’t seen in a very long time. What we’re seeing in Bitcoin in recent days is what many people have been anticipating for a while which is speculators getting burned by a sharp and aggressive correction. The rally over the last couple of months has left bitcoin vulnerable to this kind of move and it seems the run up to Christmas has triggered some profit taking on the rally and even a shift into some alternative coins.
We’re now seeing a bounce from the earlier lows after a near 20% drop on the day but losses are still substantial. This period is going to be a big test of speculators appetite for these kinds of swings when we’re seeing two-way price action, something we haven’t seen too much of recently.