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

UK 100 Index called to open +30pts at 7310, well off 7280 overnight lows, but still in need of a break above falling highs (7315) and horizontal resistance (7325). Bulls need a break above the latter; Bears require a breach of 7295 rising support. Watch levels: Bullish 7325, Bearish 7295.

Calls for a positive open are supported by upbeat trading in Asia, after a positive US close (Tech rebound, USD weak), traders hopeful about US-China trade talks despite President Trump being the fly in the ointment, downplaying prospects for quick negotiations (“no pressure on USA”).

UK Index Miners in Australia welcomed overnight China data, with August Industrial Production (+6.1% YoY) and Retail Sales growth (+9%) accelerating (consensus stable), although Fixed Asset Investment (+5.3%) fell to its lowest ever, potentially hindered by the threat of US tariffs.

UK Index Housebuilders may be sensitive to Bank of England Governor Carney’s warning to PM May’s Cabinet that a no-deal Brexit worst-case scenario could push the UK into recession, unemployment spike and house prices plunge 25-35%. Oil prices off overnight highs, as US Hurricane Florence, albeit still very much a threat, was downgraded to a Category 1.

In corporate news this morning AstraZeneca (& partner MedImmune) gets US FDA approval for Lumoxiti to treat hairy cell leukaemia, the first new treatment option in over 20 years. Vedanta Resources (under takeover by Volcan Investments) discovers gas in Indian A-32 exploration well.

Sirius Minerals agrees to $250m royalty drawdown (+ $50m equity component) to provide sufficient liquidity for project into Q2 2019, in advance of stage 2 financing. SThree Q3 gross profit +13%, trading in majority of markets encouraging, confident in full year prospects.

JD Wetherspoon FY like-for-like sales +5.0%, but revenues and op. profit towards bottom end of consensus, dividend unchanged. “Reasonable start to financial year” (6-week sales +5.5%), but higher costs to require like-like-for sales growth of ~4% to maintain record profits.

Avon Rubber H2 trading strong, expects FY pre-tax profit in-line; Protection revenue expected +7%, Dairy +4%. Good order book visibility, expects 100% EBITDA cash conversion. Bank of Georgia awarded Consumer Digital Bank of Distinction Award for second year running.

Close Brothers sold its retail finance unit (£66m loan book) to Swedish payments provider Klarna to exit unsecured retail point-of-sale finance market. Investec CEO to step down, plans to list Asset Management business separately within 12 months; H1 revenues expected moderately ahead (Asset Mgt higher, Wealth & Inv lower), but profits lower third-party; challenges in key geographies.

In focus today will be the BoE Governor Carney (11am) giving the bi-annual Whitaker lecture at the Irish Central Bank. Following yesterday’s unanimous decision by the BoE’s MPC to leave policy unchanged, traders will be listening out for any hints about UK policy outlook.

In terms of macroeconomic data, another month of solid growth expected for US Retail Sales (1:30pm), although the pace may have slowed. Import Price Inflation is likewise seen slowing from its recent tariff-boosted peak. Meanwhile, Uni of Michigan’s Consumer Sentiment survey (3pm) is forecast higher in September, a minor rebound from August lows, although confidence still downbeat versus the first half of the year.

Other speakers today include the ECB’s Nowotny (9am, hawkish) taking part in a panel discussion on banking. This afternoon, the Fed’s Evans (2pm, dovish, non-voter) discusses economic conditions and monetary policy, with an audience and media Q&A, while colleague Rosengren (3pm, hawkish, non-voter) speaks at a Brookings Institution conference.

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