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

UK 100 Index called to open flat at 7600, off its overnight lows of 7565 to engineer new horizontal; support after breaching its 3-week uptrend. Bulls need a break above 7623 overnight highs; Bears require a breach of 7590 for another test of overnight lows.  Watch levels: Bullish 7625, Bearish 7590

Calls for a flat open come after a flat close on Wall St  and a mixed session in Asia (Japan only positive as it returns from holiday), Financials, boosted by healthy earnings from Banks, battling against declines for Energy and Mining. Poor after-hours results from Netflix sent US Tech futures lower which could yet inflict read-across damage to UK Tech.

Global trade tensions are on the rise again after the US launched WTO action against five countries including the EU and China for imposing illegal tariffs. UK Index upside may be hampered by GBP off its lows, even after the UK PM bowed to Brexiteer pressure for amendments to the Brexit Bill.

Lower oil prices likely to hurt Energy as oil price try lower, still digesting reopening of Libyan supply and reports from the US that is considering waivers for oil producers on Iran sanctions. Gold is slightly higher amidst ongoing trade tensions, with markets showing interest for the yellow metal over the dollar, which itself is showing weakness versus peers ahead of Fed Chair Powell’s first semi-annual testimony before US Congress later today.

In corporate news this morning, Rio Tinto first half iron ore exports +9% after ramping up one mine and working others harder; expects shipments at high end of 2018 target range. Jefferies expects more RIO buybacks ($1-2bn); not ready to pull M&A trigger.

Royal Mail Q1 underlying revenues +2%, UKPIL -1% (Parcels +6%, Letters -7%); Parcel volumes +7%, Letter volumes -6%, GLS volumes +10%; Backs FY guidance (letter vol. down 4-6%).  TalkTalk Q1 net adds +80K, headline revenues +4.1% YoY -1.8% QoQ; FY guidance unchanged (headline EBITDA +15%, improved cash flow).

British Land dividend +3%; Office Occupation 98%, 64% pipeline let/under offer (+10pts since May); Retail remains challenging, internet competition compounded by trading headwinds; Occupancy 96.4%; CVAs = 1.6% of rents, up from 1% in May.

Galliford Try expects strong pre-exceptional FY results, in-line with guidance; outlook in-line with expectations. Genel Energy announces two-thirds increase in production from Peshkabir field in Tawke licence, Kurdistan, to 25K bopd, following completion of the Peshkabir-4 well testing program.

SSP Q3 sales +2.7% like-for-like, net contract gains +3.3%; improved operating margin; “uncertainty always exists around passenger numbers; well placed to benefit from structural growth opportunities”. Spire Healthcare appoints Jitesh Sodha as CFO. Avon Rubber gets $25m order for 93,000 M50 mask systems from US Department of Defense.

International Game Technology says FanDuel (subsidiary of Paddy Power Betfair) will use its sports-betting in New Jersey. Dairy Crest 3-month revenues +6%, expectations unchanged. Bodycote to open new heat treatment facility in UK to support UK/EU aerospace and power generation.

In focus today will be UK May Unemployment (9:30am), expected unchanged at 4.2% for the fourth month in a row. Less welcome may for UK workers (and policymakers), however, growth in Average Earnings excl. Bonuses (9:30am) is expected to have eased further in May (est. 2.7% YoY vs. 2.8% in April).

In the afternoon, focus shifts to US Industrial and Manufacturing Production (2:15pm), both expected to have rebounded in June after a major fire in May disrupted truck the manufacturing supply chain in the US. NAHB Housing Market Index (3pm), an important barometer of US economic health, is expected to print unchanged in July.

Private API Oil Inventories (9:30pm) will be released in the late evening, with economists expecting yet another draw, albeit smaller than in recent weeks, keeping the oil market and Energy equities warm despite the recent pullback on increased crude supply (Libya, OPEC) and geopolitics.

As for speakers today, all eyes will be on Central Bank chiefs. BoE Governor Carney (9am, centrist) and colleague Cunliffe (centrist) testify before the Parliament’s Treasury Select Committee to discuss the June Financial Stability Report.

Across the pond, Fed Chair Powell (3pm, centrist) delivers a semiannual monetary policy testimony to the Senate Banking Committee. Watch out for any comments in both hearings referencing economic growth and interest rates for impact on both FX and equities.

US earnings season is in full swing, with Goldman Sachs (long-time CEO Lloyd Blankfein steps down) and Johnson & Johnson reporting quarterly results.

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