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

UK 100 Index called to open flat -70pts at 7275, after breaking below rising support at 7315 and last week’s lows at 7300. This confirms a bearish flag that could complete as low at 7220. However,  while the uptrend since end-Feb may has been scuppered, the index is just about holding onto rising support at 7270 that goes back to, not just to the US election but June’s referendum. Bulls need a break above 7295; Bears can’t wait for a breach of 7270. Watch levels: Bullish 7295, Bearish 7270

Calls for a negative start to the new trading week come after late Friday’s withdrawal of Trump’s Healthcare bill, due to a continued lack of Republican support, sapped optimism. While this puts into doubt ease of passage for other stimulus measures it could actually allow the new government proceed more quickly with the pro-growth infrastructure spending, deregulation and tax cut trio that have fuelled a 4-month global reflation rally.

The UK Index is hindered by GBP strength (due to USD weakness) weighing on its 70% of internationally-generated profits as well as a drop in commodity prices (base metals Oil) as fresh risk aversion kicks in; a double whammy blow for Miners and Oil majors. DAX under pressure similarly on account of EUR strength.

Japan’s Nikkei is underperforming due to Yen strength derived from USD weakness and alternative safe haven seeking in parallel to the jumps by Gold and Silver while Property and Financials weigh. Australia’s ASX just the wrong side of breakeven on account of losses in the material space. Watch the dual-listed London miners at the open.

The late pulling of the Republican “Affordable Health Care Act” saw US equity markets pare gains on Friday as indices closed mostly lower. Although the tech-focused Nasdaq once again outperformed to finish higher, both the Dow Jones and S&P 500 closed weaker as Goldman Sachs weighed on the former while the latter suffered its worst weekly performance since Donald Trump’s November election.

Crude Oil is starting the week on the back foot as the Baker Hughes Rig Count on Friday recorded its 10th weekly increase, adding to concerns that rising US production will offset OPEC’s production cuts, given further impetus as rumours of an extension to the group’s cuts and a weaker US dollar are failing to buoy prices. Brent Crude is holding just above the crucial $50 mark at $50.20 support while US is challenging $47.50 support.

Gold is benefitting from the GOP healthcare reform failure and subsequent greenback weakness, trading at its highest level in a month, while a further $6 rally would see the precious metal reach its highest level since US President Donald Trump’s election in November. Increased safe haven demand has seen gold and its safe haven asset counterparts such as Treasury bonds and the Japanese Yen start the new week on a strong footing.

In focus this morning will be the from fallout from the 11th hour withdrawal of the US Healthcare bill on Friday night, putting a 4-month global Trump trade rally into question, as well as the run-up to Wednesday’s triggering of Article 50 to officially kick off the UK’s divorce proceedings with the EU.

On the data front, German IFO Surveys are seen largely flat with Business Climate clinging to 3yr highs of 111, while Eurozone M3 Money Supply holds firm at 4.9%. The afternoon is limited to the Dallas Fed Manufacturing Activity Index and while consensus is lacking, note recent jumps by the Philly, Chicago and Kansas equivalents.

Speaker-wise, the ECB’s Nouy and Lautenschläger speak at the Banking Supervision Annual Press Conference in Frankfurt, and the Fed’s Evans and ECB’s Praet talk “Economy and Policy” at a Global Interdependence Centre event in Madrid after the European closed.  Then it’s over to the Fed’s Kaplan for “A Discussion of Economic Conditions and the Role of Monetary Policy” in Texas after the US close.

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

• Oil falls on rising U.S. drilling, uncertainty of OPEC – led cut extension
• BT to be fined £42m for breaching contracts with telecoms providers
• Stagecoach says disappointed on unsuccessful bid for New South Western Rail franchise
• Babcock agrees with the UK over termination of Magnox contract
• European shares seen lower after Trump healthcare defeat
• AstraZeneca wins approval for lung cancer pill in China
• Maersk Oil starts production at North Sea oilfield
• Old Mutual sells minority stake in U.S. fund arm to China’s HNA
• Shell and Anadarko mull clean break from Permian venture
• Dollar hit by Trump’s healthcare defeat, drops to near 2 – month low
• Glencore to halt operations at two Australian coal mines due to cyclone
• Gold hits 1 – month peak as Trump healthcare failure hurts dollar
• BHP Billiton shuts South Walker Creek coal mine ahead of Cyclone Debbie arrival
• London copper wobbles in wake of Trump healthcare setback