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

UK 100 Index called to open flat at 7445, up off 7435 overnight lows thanks to intersecting rising support dating back to 20 November. Bulls need to get above 7460 to keep the uptrend alive. Bears need a breach of overnight lows for another leg lower. Watch levels: Bullish 7460, Bearish 7435

Calls for a flat start derive from a lower US and Asian close amid fresh US tax reform scepticism after opposition from Republican senators (Rubio & Lee) put President Trump’s Alabama-thinned upper house majority in even more jeopardy.

Momentum was also lost as investors further digested a not-so-hot outlook from the US Fed, weighing on Asian trading. While tax reform concerns sent USD lower, keeping GBP around yesterday’s highs the UK Index is nonetheless buoyed by higher oil prices, extending their bounce following yesterday’s IEA report and solid metals prices.

In corporate news, Persimmon Chairman Nicholas Wrigley resigns in row over absence of cap for 2012 incentive pay plan. Standard Life Aberdeen merger on track, combined business net outflows in-line with views. Sky and BT agree cross selling of BT Sports and Sky’s NOW TV. AVEVA and Schneider Electric say US regulatory clearance still required for merger, may delay completion.

SThree expects FY profit slightly ahead of consensus. Trinity Mirror expects FY performance in line with expectations. Independent Oil and Gas receives 12-month extension to Dec 2018 for licence P1736 containing Blythe gas discovery. President Energy says significant workover success made at Puesto Flores Field from first two wells, ahead of expectations.

US equity markets closed lower across the board on Thursday, with the Dow Jones breaking its 5-day streak of higher closes as fresh concerns over proposed Republican tax reform dented sentiment. Despite Disney outperformance after striking a deal to buy a large chunk of Fox’s assets, the Dow closed lower as a plethora of other heavyweight stocks lagged, while the S&P 500 finished weaker as Healthcare and Materials sectors weighed.

Crude Oil benchmarks have maintained yesterday’s price rally on continued outage at the UK’s Forties pipeline, while the IEA reported that 2018 supply will be largely balanced as an early surplus is negated by a deficit in the latter half of the year. Brent crude is trading around overnight highs of $63.8, while US crude has regained a $52 handle.

Gold has further extended its rally from 5-month lows as the US dollar retreats from yesterday afternoon’s highs, helping the precious metal to find rising lows support around $1255. Progression on US tax reform and its subsequent impact on the US dollar will likely drive sentiment for the safe-haven asset throughout the day.

In focus today will be any soundbites from the EU meeting in Brussels at which members, amongst other things, will be discussing Brexit. While approval of the progression of negotiations is expected to be a virtual procession, the start date of the next phase of talks and the government’s ability to renegotiate a final deal will be key talking points to come out of the meeting.

Data-wise, the docket is rather baron with just October’s Eurozone Trade Balance (10am) – forecast largely unchanged – on the docket this morning along with comments from the ECB’s Nowotny (9am).

This afternoon, is a little more busy with Bank of England Chief Economist Andy Haldane (1.15pm) first up to speak to markets after yesterday’s policy update. Macro prints include US Empire Manufacturing (1.30pm) and Industrial Production (2.15pm) seen giving up some ground in November, albeit with higher capacity utilisation.

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