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

UK 100 Index called to open +25pts at 7055 (ex-dividend impact -16pts), rebounding from an successful overnight test of 7000 as support. After breaking above 7025 Bulls need to overcome 7065 if they want to regain yesterday’s 7115 peak. Bears require 7040 to give way for another test of 7025 and 7000.  Watch levels: Bullish 7065, Bearish 7040

Calls for gains at the open come after choppy overnight trading. Financials led declines on Wall St after Fed Chair Powell pledged to stay a data-driven course for an interest rate hike in December, in spite of market volatility. Chinese and Australian markets higher following reports the US and China tentatively resumed trade negotiations, Chinese authorities sending a formal written response to Trump’s proposals.

GBP rallying after UK Cabinet approved PM May’s proposed Brexit treaty text, although not without some significant dissent in the ranks. Oil prices bouncing off overnight lows in spite of larger than expected build in API oil inventories (+8.79m vs +3.01m est. +7.83m prev.). Increasing supply appears to be having less of an impact on oil prices recently, traders back focusing on traditional concerns about future demand.

In corporate news today, Antofagasta expansion of Los Pelambres project approved, adding average 60K tonnes of copper per year to mine’s production over first 15 years of operation. Reuters reports Rio Tinto may bid for stake in Teck Resources’ Quebrada Blanca copper mine in Chile.

Bovis Homes says improved operating performance driving significant improvement in financial performance. Fully sold for 2018, on track for record profits. Making good progress against medium term targets, on track to achieve a number of them as early as December.

Royal Mail H1 adj. revenue +1% YoY, adj. pre-tax profit -27%, interim dividend +4%. FY outlook unchanged, sees op. profit before £150m transformation costs in £550-500m range; committed to £100m cost avoidance target.

3i Group H1 total return on shareholder funds +10% YoY, NAV +7.2% vs. Q2; dividend +87.5% (new policy); confident in growth plans, will maintain focus on active management, good momentum across portfolio, but cautious on pricing of new investment

Tullow Oil Q3 production in-line, FY oil production guidance reduced to 87-91K bopd (from 89-95K at H1), Free cash flow guidance c. $700m, net debt expected c. $2.8bn (vs $3.5bn end-17).  Cairn Energy announces oil discovery on 9/14a-17B well in North Sea, estimating recoverable resources of 15-5m barrels of oil equivalent.

Premier Oil Q3 oil production 78.4K boepd (from 76.2 in H1), FY production forecast around 80K boepd. FY operating costs unchanged, exploration expense lowered to $365m (down from $380m).

St. Modwen Properties sells £82m of retail assets (incl. Edmonton Green shopping centre) at 3% above book value, and smaller assets in Liverpool and Cannock for 6% above. Great Portland Estates announces £200m share buyback programme over 12 months.

Mediclinic H1 revenue -1% YoY, EBITDA -8%, adj. op. profit -15%, loss worsened to £168m (from £50m) after Swiss regulatory changes, dividend unchanged. FY guidance unchanged. Capex expected +9%. Spirent Communications says CEO to retire in 2019.

Close Bros. Loan book +1.9%, driven by commercial; net interest in-line; impairments low; solid net inflows, but market moves mean assets under management -1.9% and total assets -2.5%; “solid start to year, continued to perform well in current market conditions”.

Investec H1 profits +3.6% and income +7.5% grew despite South Africa challenges; op profit +14% (+18% at constant FX); third party assets under management +3.7% (7.2% at constant FX); Asset management de-merger progressing well towards H2 2019 completion.

Aston Martin Q3 volumes +99% YoY, revenue +81%, pre-tax profit +196%. Assembly of first DBX prototype on schedule, full production starting 2020. FY outlook reaffirmed, sales toward top end of the 6200-6400 range.

Cineworld Q3 like-for-like revenue +10.2% YoY (US: +13.2%, UK/Ireland +2.1%, Rest +2.2%), on track to deliver FY performance in-line with expectations. Card Factory Q3 like-for-like sales flat YTD (after +3.5% prev. year). Backs FY earnings guidance ahead of the key Christmas trading period.

In focus today will be the fallout from the unveiling of the final Brexit treaty text. With Labour and the DUP vowing to vote against PM May’s government, will the UK descend into a fresh political crisis, all the while still struggling to negotiate with Brussels?

October UK Retail Sales (9:30am) ex-Fuel are expected stronger at +3.3% YoY (3.2% prev.), although the headline metric (incl. Fuel) may slow to 2.8% (3% prev.) on account of the recent drop in global energy prices. Watch UK Index Retail/Grocers for read-across.

US Retail Sales (1:30pm) are also seen accelerating to 0.5% MoM in October, although manufacturing indices from both NY and Philadelphia are set forecast weaker. DOE Oil Inventories (3:30pm) may show another crude build, confirming the overnight API data.

In terms of speakers, we have a barrage of central bankers, including Fed’s Powell (4pm), Quarles (3pm), Bostic (6pm), Kashkari (8pm), and their ECB counterparts Cœuré (12:15pm), Praet (1:10pm) and VP de Guindos (2:35pm). Jay Powell tours areas affected by Hurricane Harvey and is unlikely to make remarks on monetary policy, but others may offer comments moving USD and EUR pairs.

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