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

UK 100 Index called to open flat at 7660, off their overnight lows of 7655, holding the upper half of its current 7590-7720 range. Bulls need a break above 7685 for a challenge on Friday’s 7717 July highs; Bears require a breach of 7655 overnight lows for a return towards 3-week rising support at 7590.  Watch levels: Bullish 7685, Bearish 7655

Calls for a muted open come in spite of a poor start to the trading week in Asia (China and Australia in the red, Japan on holiday) after China Q2 GDP slowed to 6.7% YoY, its weakest since Q3 2016, on the back of Beijing’s efforts to deleverage. The growth data may have been in line with economist expectations, and above Beijing’s own 6.5% target, but the risk is that Asia’s powerhouse slows even further should a US-instigated trade war gather momentum.

At an EU-China economic summit in Beijing, EU President Donald Tusk has called for reform of WTO conflict resolution and industrial subsidies rulebook. As the trade war rumbles on, American “foes” Europe and China are finding more common ground in their tariff conflict with Donald Trump.

Oil prices are flat which, coupled with a marginally weaker USD and the China GDP, could do some mild damage to UK Index Energy stocks. Gold has edged up amid USD weakness, after GBP rebounded, something which could remain a hindrance for the UK Index .

In corporate news this morning, UK Index Miners (BHP and Rio Tinto -0.6% in Australia overnight) may be sensitive to China GDP, in-line with consensus but slowest since 2016. Meggitt signs $21m fuel cell contract with US DLA for UH-60 Black Hawk helicopter programme until 2022.

Indivior says US District Court for New Jersey grants preliminary injunction against Dr. Reddy’s, unable to sell, offer to sell, or import generic sublingual film pending outcome of patent litigation.

Rio Tinto analysts at Citi expect proceeds from $3.5bn Grasbeg stake sale to go towards roughly $12bn shareholder returns. Defense and Aerospace stocks like BAE Systems, Rolls Royce, Meggitt, Cobham, Ultra Electronics, Chemring and QinetiQ could be sensitive to soundbites from the Farnborough International Air Show.

In focus today (a quiet one for macro) will be June US Advance Retail Sales (1:30pm), due to their inflationary read-across for the Fed and its interest rate normalisation policy. With US inflation running above target (2% benchmark), will stronger retail sales provide more ammunition for Fed hawks?

In politics, Presidents Trump and Putin meeting for a US-Russia summit in Helsinki. While the talks themselves may only last a couple of hours, be on the lookout for the post-meeting press conference. The usual Trumpian remarks on politics, trade and oil could move financial markets.

UK PM May also faces another tough week, with rebels preparing to vote for amendments on the new Brexit Customs bill that could lead to a no confidence vote before the summer recess.

As for the rest of the week (alongside many corporate results), the UK gets updates on a trio of critical indicators, all of which could impact Bank of England (BoE) thinking, moving GBP and the UK Index : Unemployment (Tue, 9:30am), Consumer Price Inflation (Weds, 9:30am) and Retail Sales (Thurs, 9:30am)

After a softer than first five months, June Consumer Price Inflation is expected to have strengthened YoY at the headline (2.6% est. vs. 2.4% in May) but, more importantly, remain unchanged for the less volatile core metric (est. 2.1%).

Unemployment is seen unchanged at 4.2% while Retail Sales (ex-fuel) may slow to 3.7% YoY from 4.4% in May. Both  may disappoint economists (notably hawks), especially if in tandem with another soft core inflation figure, dampening BoE rate hike expectations for August.

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