The DAX index has ticked lower in the Friday session. Currently, the index is at 13,079.50, down 0.23% on the day. In economic news, German indicators were solid. German GfK Consumer Climate inched up to 10.8, above the estimate of 10.7 points. As well, Import Prices gained 0.8%, up 0.6% from the previous release.

European stock markets are digesting the results of Thursday’s Catalan election. With no party winning an outright majority, the uncertainty could spook investors and hurt the stock markets. Although a nationalist party scooped up the most seats, three pro-independence parties have won 70 seats out of 135, good enough for a slim majority. The vote is a stinging rebuke for Spanish Prime Minister Mariano Rajoy, who has imposed direct rule on the region and was hoping that the election would hurt the independence movement. Rajoy’s heavy-handed approach has clearly not extinguished the pro-independence movement, and Spain could be headed for more political turmoil in the coming months.

Republicans lawmakers presented Donald Trump with an early Christmas present, as both branches of Congress passed Trump’s landmark tax reform bill. One of Trump’s key campaign pledges was tax reform, and the new legislation marks the first overhaul of the tax code since the Reagan administration. There was more good news, as US Final GDP posted a strong gain of 3.2%, just shy of the Preliminary GDP reading of 3.3%. With the US economy posting growth above 3% for another quarter, the Federal Reserve remains on track for another rate hike in January. The CME Group has pegged the odds of a January hike at 98%, and if the economy continues its current pace, the Fed could raise rates up to four times in 2018. Inflation remains a sore point, as the Fed target of 2.0% remains well out of reach. Fed Chair Janet Yellen and other FOMC members have said they expect that the strong labor market will lead to higher inflation, but the Fed has demonstrated that it is willing to press ahead with rate hikes despite low inflation.

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