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

UK 100 Index called to open +20pts at 7390 (ex-div -14.5pts), to test the ceiling of its 7-Nov falling channel. Bulls are eager for a breakout and bullish turnaround towards 7600 record highs. Bears are expecting another retrace to yesterday’s 7355 lows, extending the down channel towards 7300. Watch levels: Bullish 7400, Bearish 7385.

Calls for a positive start are helped by fresh gains in Asia, shrugging off several days of losses that potentially puts an end to a commodity sector inspired sell-off, giving bulls some hope of a turnaround. Sentiment has been helped by oil finding support, offering respite to the key Energy sector, with further help at hand from sector M&A talk downunder. Telcos and Tech also helped, along with metals prices off their lows to buoy the Miners.

In corporate news this morning Prudential 9-month new business profit +15%, Life +17%, net inflows £12.8bn, helped by Asia. Mediclinic swings to first half loss, talks with Spire Healthcare continue, H2 seen in-line. GKN to book higher US charges than expected, CEO designate to leave immediately. WPP ‘More Confident of Media Business in 2018’.

GlaxoSmithKline Trelegy Ellipta Gets EU marketing approval. 3i Group On track to deliver another year of strong growth. British Land says wider operating environment uncertain, but generating healthy leasing interest at good pricing. Royal Mail H1 revenues beat, so does dividend, adjusted profits flat. Premier Oil on track to produce first oil from key North Sea project.

US equity markets closed at their lowest level in three weeks on Wednesday as concerns about Republicans’ ability to pass tax reform plans and an under pressure Energy sector weighed. The Dow Jones underperformed, dropping 135 points as Caterpillar dragged the index lower, while the S&P 500’s Energy sector pulled the index 0.55% lower. The Tech-focused Nasdaq outperformed, although also closed lower.

Crude Oil prices have limped higher overnight following Tuesday’s 2-week lows, however have failed to better yesterday’s EIA-inspired highs. Brent Crude is attempting to regain a $62 handle, however is struggling to overcome falling highs since Tuesday, while US Crude is also battling falling highs around $55.4 a barrel.

Gold has retreated overnight as the US dollar recovers from 3-week lows. The precious metal dropped to an overnight low of $1275 as the greenback attempts to overcome intersecting resistance, however remains a way off Tuesday’s lows of $1270.

In focus today will be tonight’s vote on US tax reform in the US House Of Representatives where President Trump’s Republican party has a clear majority. However, he has a much thinner majority in the Senate, and the upper house is proposing a different bill which includes a delay to tax cuts. Tonight’s vote might thus prove a relatively easy hurdle to clear, still leaving the administration a long way from that elusive first major legislative win. Remember, that hopes of tax cuts have helped fuel much of the recent market rally to record highs.

Data-wise, UK Retail Sales (9.30am) are forecast to have rebounded to flat in October (0.0% vs -0.7%) but fall negative on an annual basis (-0.4% vs 1.6% prev), impacting UK Index retailers and GBP. Eurozone Consumer Price inflation (CPI; 10am) is expected to be confirmed slower in October, both Headline (1.4%) and Core (1.1%) measures still a way off the ECB’s 2% target. Watch EUR.

In the US this afternoon, the US Philly Fed (1.30pm) may have dropped like yesterday’s Empire Manufacturing, while Import Price Inflation slows a touch and Industrial and Manufacturing Production (2.15pm) accelerates while the NAHB Housing Market index (3pm) holds firm, close to seven month highs. All could have a bearing on the USD and US equities, the former impacting GBP and EUR, too and thus European equities.

A plethora of speakers are scheduled to share thoughts today, including the ECB’s Mersch (8:45am), ECB Chief Economist Praet (11am),  Bank of England Governor Carney and a panel of his deputies (2pm), Cleveland Fed President Mester (2:10pm), ECB’s Villeroy and Fed’s Brainard (both 2:30pm), Dallas Fed President Kaplan (5:30pm), ECB’s Constancio (8pm), the Fed’s Brainard once again (8:45pm) before San Francisco Fed President  Williams (9:45pm) rounds off the packed calendar.

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