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

UK 100 Index called to open +23pts at 7520, rebounding after Wednesday’s sell-off that revisited the index’s June lows. Bulls need a break above 7555 to attempt to recover some of yesterday’s losses. Bears require a breach 7491 overnight lows to once again challenge June’s 7485 low. Watch levels: Bullish 7560, Bearish 7476

Calls for a positive open come in spite of an across-the-board sell off on Wall St and on Asian bourses, where concerns lingered over slowdown in China’s economy (Fixed Asset Investment growth at record lows) and the ongoing Turkish tinderbox. Emerging market currencies got some reprieve after news that Qatar was investing $15bn to prop up Turkish lira.

Much of the positive mood coming into the European trading session could be attributed to news of a potential detente in US-China trade relations, as China is sending a high-level trade delegates to the US, led by Vice Minister of Commerce Wang Shouwen, to discuss the ongoing global tariff confrontation.

USD retreated from 13-month highs as risk aversion wanes, supporting the USD-priced metals & oil prices and, in turn, helping the UK Index ’s heavyweight Energy & Mining sectors. Oil prices are off overnight lows on the back of a weaker USD, after suffering steep losses yesterday. Copper is likewise rebounding, but lingering worries over Chinese economy could yet put strain on some of the UK Index Miners (dual-listed BHP Billiton and Rio Tinto are down 1.5-2% in Australia overnight).

In corporate news this morning Takeover Panel confirms that Disney must make the £14/share offer for Sky, if it buys 21st Century Fox. Mandatory offer will not apply if either Fox buys 100% of Sky or if another party buys more than 50% of Sky by the time Disney/Fox deal is finalised. This confirms the original regulator ruling.

Kingfisher Q2 like-for-like group sales +1.6% in Q2 vs -0.4% fall in Q1, helped by weather-related categories, UK & Ireland sales +4.2% YoY (B&Q +3.6%, Screwfix +5.5%), but French sales at Castorama -3.8% on weaker footfall. H1 group gross margin -40bp (Q2 ahead of Q1), but expects to grow FY group gross margin after clearance costs.

KAZ Minerals H1 gross revenue +31%, op. profit +59%, pre-tax profit +48%, copper production +18% to 140kt. FY copper production guidance reiterated at 270-300kt, cost guidance maintained, copper market outlook positive on back of strong demand and declining supply from existing mines.

Rank Group H1 like-for-like group revenue -2.3% YoY, group EBITDA (before exceptionals) -6.8%, adj. pre-tax profit -6.3%, dividend +2.1%. New leadership will focus on op. improvements. Bank of Georgia H1 group profit +11.2% YoY, total assets +0.6%, banking business revenue +14.8%, net interest margin -40bp.

Marshalls H1 revenue +12% YoY, EBITDA +13%, pre-tax profit +12%, interim dividend +18%, op. margin +10bps, June-July trading very strong at +21%, but UK market is forecast to contract by 0.6% in 2018 followed by growth in 2019.

In focus today will be UK Retail Sales (9:30am) figures for July. The World Cup spending bonanza is expected to have helped UK retailers, with turnover growth accelerating to 3% YoY (from 2.8% growth in June), though some of the increased spending can be attributed to rising energy costs (ex-Fuel Retail Sales are expected to slow).

US housing market is showing signs of resilience, with both Housing Starts and Building Permits (1:30pm) forecast higher in July. Manufacturing, however, looks to be slowing down, with Philly Fed Index (1:30pm) projected lower in August at 22.0 (against 25.7 in July).

US retail giant Wal-Mart is reporting quarterly earnings today, joined by PC hardware manufacturer NVIDIA and retailer JC Penney.

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