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

UK 100 Index called to open -10pts at 7715, still in a 7-week rising channel, albeit within a narrowing range. Bulls need a break above 7735 overnight highs, then yesterday’s 7752 peak; Bears require a breach of 5-day rising support at 7710, then 7690 recent lows. Watch levels: Bullish 7735, Bearish 7710

Calls for a slightly negative open come after a negative US close and mixed session in Asia overnight. Sentiment curbed by North Korea cancelling talks with the South, blaming US-SK military drills (and potential one-sided denuclearisation demands), putting a landmark June 12 US-NK summit at risk. Or is this merely game-playing from Kim, taken straight from Trump’s negotiation playbook?

Risk appetite also dampened by Japanese Q1 GDP, contracting for the first time since Q4 2015, begging more questions about plateauing global growth, although temporary inventory run down may explain, helping it avoid a Q2 recession.

UK Index continues to be helped Oil prices holding up around 3.5yr highs, benefiting heavyweight Energy (14.5% of UK Index ). This even as USD remains strong (demand for US Treasury yields at 7yr highs, well above 3%), normally to the detriment of dollar-denominated commodities. Further UK Index support comes from strong USD keeping GBP on the back foot.

In corporate news this morning, Mondi Q1 underlying operating profit +15% YoY, +6% QoQ, higher average selling prices, positive outlook but continue to see inflationary cost pressures and FX headwinds. Burberry trading in line with guidance; FY revenues -1%, comparable store sales +3%, adj. Op profit +2% (5% at constant FX); dividend +6%, new £150m share buyback.

Paddy Power Betfair confirms talks with US-based fantasy sports company FanDuel about combining US operations following the US Supreme Court’s landmark ruling on sports betting. Micro Focus sees H1 revenues ahead of views; backs FY guidance. Diageo launches $2nb bonds.

Cineworld says revenue, admissions on the rise. National Express Q1 rev +1.7% YoY, with North American division +9%, backs FY guidance. SSP Group H1 underlying revenue +9.8% YoY, like-for-like sales +2.8%, with underlying profit before tax +40.4%, continue to plan cautiously. Marston underlying Q1 revenue +20% YoY, average profit per pub +1%.

Mitchells & Butler H1 like-for-like sales +1.6% YoY; +2.5% adjusted for snow; trading strong since, helped by good weather, still uncertain environment with unrelenting cost headwinds. Balfour Beatty joint venture awarded contract worth $189m for Global Switch data-centers. Moss Bros Chairman Debbie Hewitt to step down; trading Improves.

In focus today will be Eurozone (10:00am) April Inflation, expected to have slowed to (0.7 YoY from 1% prev.). Inflation projections feature prominently in ECB interest rate discussions and today’s figures could have an implication for next month’s interest rate decision meeting (June 14).

Later in the day US Building Permits/Housing Starts (1:30pm) are both expected to show mild contraction. This will be followed by US Industrial/Manufacturing Production March (2:15pm) potentially providing more context about US economic growth prospects, with implications for both US equities and USD (currently at 2018 highs), should any of the figures diverge sharply from consensus expectations.

Finally, DOE Inventory data for Crude Oil, Gasoline and Distillates will be released at 3:30pm, potentially supporting last night’s unexpected 4.854m/barrel build in API stocks. With international marker Brent  pushing 3.5yr highs, official confirmation of a build could put a brake on the oil rally, putting pressure on hitherto rallying UK Index Energy names.

Among speakers today we have ECB Governing Council members, including President Mario Draghi (1pm) and colleagues Benoit Coeure (1:30pm) and ECB Chief Economist Peter Praet (3:30pm). From across the Pond, Fed’s Bostic speaks at 1:30pm while Bullard features again today, later in the evening (11:30pm).

Among US companies reporting tonight (after the US close) will be IT giant Cisco Systems, as well as retailer Macy’s.

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