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

UK 100 Index called to open flat at 7520, having traded sideways overnight in a tight 7510-7525 range that takes close to the apex of a bullish narrowing pattern. A break from this could see it revisit yesterday’s fresh record highs and maybe even complete that 2-week bullish inverse Head & Shoulders pattern. Bulls need a break above 7530; Bears require a breach of rising support at 7510. Watch levels: Bullish 7525, Bearish 7515.

A flat opening call comes after more record highs on Wall St and despite a negative session to close the weak in Asia. The UK Index outperforms peers thanks to overnight GBP weakness that helps offset oil prices -6% as traders are left underwhelmed by the OPEC decision.

The negative oil reaction to a 9-month OPEC production cut extension is a prime example of ‘buy the rumour, sell the fact’. With nine months having become the baseline – prices +17% in the run-up, hoping for longer and maybe even deeper cuts – potential for an upside surprise was already limited.

If anything, the simple extension begs questions about what happens next March and what OPEC’s long-term strategy is for combating rising US production and a prolonged global supply glut, to get prices back above $60.

Both Japan’s Nikkei and Australia’s ASX are in the red to the same degree as their Energy contingent smarts from the oil price drop. The former is also hampered by a firmer Yen following solid inflation data, while the latter’s Miners suffer from Oil’s knock-on as well as continued weakness in Iron ore and Copper off its highs.

US equity markets moved higher for a 6th consecutive session, ignoring falling Crude Oil prices, as major Tech stocks extended recent gains. Popular growth companies Alphabet, Netflix and Facebook helped lead the Nasdaq to a fresh all-time closing high alongside the S&P 500. The Dow Jones also closed higher, however underperformed relative to peers, with UnitedHealth leading risers on Trump healthcare reform hopes, while Chevron and Goldman Sachs contributed most losses after recent strength.

As alluded to above, Crude Oil prices have suffered on the back of OPEC’s 9-month extension to production cuts. Both Brent and US benchmarks have fallen back to 10-week rising lows support at $51 and $48.50 respectively, crashing through three support levels on the way. Crude bulls will be hoping for prices to retrace yesterday’s losses to $54.50 (Brent) and $52 (US), while bears will be hoping downward pressure mounts on both benchmarks for support to give way.

Having tested rising lows support at $1253 overnight, Gold has recovered to trade $1258.5 on account of the US dollar coming off overnight highs. The precious metal – trading in a narrowing pattern between $1253-1261 – has seen safe-haven demand (US politics, UK terror attack) dissipate and, with no Fed speakers scheduled today, focus will likely remain on FX market movements.

In focus today will be the negative oil market reaction to yesterday’s OPEC meeting delivering the widely priced in 9-month extension, but also fuelling questions about its exit strategy.

In terms of data, this afternoon the second reading of US GDP (1pm) is expected to confirm growth of 2.3%, while Personal Consumption Expenditure is expected at 2.0%. The final May reading of the University of Michigan Sentiment (3pm) is seen cooling from the first reading of the month, although holds above the 2017 average.

While speakers are few and far between today – the ECB’s Coeure (9am; meeting of Francophone central bank governors, Switzerland) the only speaker of note – investors will closely follow commentary from the meeting of G7 leaders in Sicily, as President Trump continues his European tour, while UK election campaigning restarts after the Manchester tragedy.

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

• Spirax–Sarco buys Chromalox for $415m
• Spire Healthcare reiterates FY 2017 guidance
• Intertek 4-month revenue up 14.2%
• Restaurant Group LfL 20-week sales -1.8%
• Hammerson sells Westwood and Westwood gateway retail parks
• Informa re-confirms full year expectations
• Lincoln Minerals enters $9.6m share placement agreements
• Alfa Financial Software prices UK IPO at 325p