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

UK 100 Index called to open -35pts at 7018, extending its reversal, making a more meaningful test of last week’s 7025 lows. Bulls need a break above 7035 to inspire hopes of rebound to Monday’s 7175 peak. Bears might consider a breach of 7000 as opening the door for a full retrace towards October’s 6850 trough. Watch levels: Bullish 7035, Bearish 7000

Calls for a negative start come after mixed global equity trading overnight. While a Tech rebound helped the Nasdaq close flat (and Japan positive) this was not enough to withstand downward pressure on Basic Materials and Energy and so the Dow and S&P finished lower and dragged in Australia.

Energy lower in Asia after another 7% oil price slide taking declines from recent highs to 25% for WTI and 29% for Brent, derived from fears over both supply and demand. China Retail Sales growth also disappointed (slowest in 5 months), begging questions about the economy and its equity markets reversed yesterday’s gains.

GBP still strong, trying to regain yesterday’s highs amid hopes of a Brexit deal, but uncertainty high ahead of 2pm Cabinet meeting about whether deal will be accepted by the UK government. German Autos may like news of the US holding off on car tariffs after a trade meeting.

In corporate news today, Smiths Group to separate Smiths Medical (details in March). Q1 group trading in-line, underlying revenue -1% YoY. Medical and Detection hit by regulatory/contract challenges, but on track for H2 growth. Expects to “at least sustain” FY18 growth rate, but H2 weighted.

Prudential 9M life insurance new business profit +17% at constant FX (Asia: +15%, US +22%). M&G Prudential new business profit +18%; demerger track. British Land: Retail to remain challenging (long-term structural, short-term headwinds). Office letting ahead of schedule and on better terms (H1: +5.8% like-for-like). Portfolio -1.9% (retail -4.5%, offices +0.7%, developments +7.2%); EPRA NAV -2.9%; Underlying profit -14.6%; Dividend +3%.

Tobacco may be sensitive to Juul shutting down its Facebook and Instagram accounts and curbing other social media use in the USA, in response to FDA calls to curb underage e-cigarette use. InterContinental Hotels publishes final terms for €500m 2.125% notes offering due 15 May 2027, as part of £2bn Euro medium term note programme.

SSE H1 adj. pre-tax profit -40.9%, interim dividend +3.2% (intends to deliver on May 2018’s 5yr dividend plan); outlook for Networks and Wholesale in-line with September statement, Energy Portfolio Management now expected to incur slightly lower adjusted operating loss: to create new entity SSE Renewables (for UK and Irish renewable assets)

The US Department of Justice says IAG’s British Airways and Iberia will pay $5.8m to settle allegations of false delivery time claims to foreign destinations. INTU says offer deadline for Peel/Olayan/Brookfield consortium extended by a week to 22 Nov.

Cobham 10M trading in-line. Mission Systems, Communications seeing stronger underlying op. profit than prev. year, but Advanced Electronic and Aviation weaker. Delivered 18 systems for KC-46 programme, in talks with Boeing reg. damages and withheld payments. FY guidance unchanged.

Workspace H1 net rental income +17% YoY, pre-tax profit -18% after lower increase in property valuation and reduced disposal profits. EPRA NAV/share +3.7%, interim dividend +20%. Expected to complete 5 more projects in H2. Grainger to acquire GRIP from JV partner APG for £396m (£696m assets); £347m rights issue to fund growth. Pipeline £1.37bn, ahead of £850m target for 2020. FY adj earnings +26%, net rental income +8% (+4% like-for-like), EPRA NNNAV +4%.

Flybe in discussions with several strategic operators about potential sale. H1 revenue -2.4% YoY, adj. pre-tax profit +48.9%, capacity -9% (revenue per seat +7.2%). Short-haul market “soft” with high FX/fuel headwinds. Looking to further reduce capacity and cut costs.

Speedy Hire H1 revenues +6.5% (post disposals), EBITDA 9.5%, adj. Pre-tax profit +24.1%, div +20%; “remain confident of delivering a result for the full year in line with our expectations.” Avon Rubber FY revenues +4% (+8.7% at constant FX), orders +4.4%, order book +26%, adj. operating profit +4.6% (+11.8% at constant FX), div +30%; Strong order book provides good visibility to continue strong momentum.

In focus today will be UK Consumer Price Inflation (9:30am). Price growth should echo wage growth data earlier this week, with core inflation forecast accelerating to 2% YoY (from 1.9%). In a related bit of macro data, Retail Prices are seen revving up to 3.4% YoY (after 3.3% in Sept), with potential benefit to UK Index Retailers.

Across the Pond, US price growth (1:30pm) may stay unchanged at 2.2%, putting both inflationary benchmarks at or around the 2% target set by their respective central banks, increasing the case for further interest rate hikes (to staunch inflationary pressure) on both sides of the Atlantic.

API will publish its oil inventories (9:30pm) tonight, one day later than usual. Market expects another inventory build this week to keep oil and Energy shares under pressure of increased supply.

In terms of speakers, the focus will be on the Fed chair Powell (11pm), participating in a moderated Q&A session in Dallas together with colleague Kaplan. In Washington, Fed’s Quarles (11pm) will give semi-annual testimony on regulatory supervision before the House Financial Services Committee. Elsewhere, the BoE deputy governor Ramsden (1:30pm) will take part in an online Q&A on the future of money.

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