Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open -15pts at 6820, an improvement on overnight 11-day lows of 6809, but still in a 2-week falling channel. The Bulls are hopeful of a rally back to the 6860 ceiling of said channel which would increase the chances of a bullish double-bottom reversal back to recent 6950 highs. But only if it can make a bullish escape from the current downtrend. The Bears remain watchful of overnight lows hoping a breach keeps the downtrend alive towards the 6740 lows of 5 Aug. Watch levels: Bullish 6835, Bearish 6800.

Expectations of a soft open are no surprise in light of a weak US close and Asian bourses following suit overnight. A stronger USD and lower commodity prices (notably oil hurting Energy names, but also Copper and Iron Ore) have dented sentiment although most have since found their feet. Traction is, nonetheless, rather lacking as investors begin their typical shift to ‘wait ‘n’ see’ mode ahead of a speech by Fed Chair Janet Yellen tomorrow. Traders are, as always, hoping to be able to decipher the path for US monetary policy. They may be left wanting. Again.

US stocks ended Wednesday’s session lower as Healthcare stocks underperformed amid fresh unease about the pricing of lifesaving drugs and oil hurt Energy names. Low volumes are also playing their part with a quiet market being easily shoved about ahead of Friday’s speech by Fed Chair Janet Yellen.

Investors are hoping that August’s relative boredom continues since the month has seen some good times for equity markets. Don’t forget that a more hawkish tone could be a boon for equity markets if it consists of praise for the US economy, while excessive dovishness could hinder them if the tone is one of concern about the global outlook.

The pressure is back on Crude oil prices – even if WTI could hit $47.4 today, the near term outlook is clouded by falling highs as global oversupply concerns return to haunt the market. This came after Iraq said it’s still not producing as much oil as it would like. So no chance of an output freeze then. Brent is in a narrowing pattern and potentially heading towards $49.5.

Gold has broken down out of its Aug range to pick up support around $1325, which puts it at the floor of a falling channel ahead of Tomorrow’s Jackson’s Hole appearance by Fed Chair Yellen – sure to move the USD. But has recent commodity weakness exceeded the USD’s move higher. Is there potential for the former to correct higher?

In focus today, after a downtick for its PMI data, will be German IFO Surveys which consensus sees improving only marginally in August. Business Climate is seen holding close to 12-month highs while the Current Assessment continues its bounce back towards year highs and Expectations reverse some of last month’s dip.

After UK CBI Orders and Pricing data surprised to the upside on Tuesday, and UK Retail Sales smashed expectations last week – both confounding Brexit fears – it’ll be very interesting to see whether CBI Retail Sales can offer a similar assessment.

In the afternoon economists expect US Durable Goods Orders to deliver a reversal of June weakness. However these are notoriously volatile. Capital Goods Orders are, however, seen mixed, while US PMI Services may have ticked further into growth territory, adding to a host of positive data suggesting a US rate rise remains warranted.

In light of recently mixed Fed survey data (Empire state + Richmond Fed missed; Chicago + Philly improved) the Kansas City Fed read will be all the more pertinent as central bankers ascend on Jackson hole for day one of its annual Economic symposium. Markets are hoping Fed Chair Yellen may offer hints as to the path for US monetary policy tomorrow, but a speech entitled “Designing Resilient Monetary Policy Frameworks for the Future” may focus more on the long-term, ‘what we have learnt post-crisis’. 

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• CRH interim dividend up, sees FY earnings above €3bn
• Life insurer Phoenix says Solvency II surplus impacted by Brexit
• Phoenix Group Reports 21% Drop in 1H Operating Profit
• Royal Bank of Scotland redeems American depositary shares
• Playtech to pay €150m as special dividend
• STV reports 50 percent rise in first – half pretax profit
• Sibanye Gold says H1 group gold production up 5%
• Essentra sells Porous Technologies to Filtration Group for £220m
• GFK’s majority owner eyes merger or sale
• Anglo Pacific Narrows Net Loss; Sees Boost From Brexit
• Spire Healthcare 1H Pretax Profit Rises; Reaffirms 2016 Growth Target
• Allied Minds 1H Pretax Loss Widens On Higher Costs
• John Laing Reports Rise in 1H NAV/Share, Earnings