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

UK 100 Index called to open +20pts at 7510, holding above Friday’s 7490 close and after an overnight test of 7520. Bulls are looking for another test of the 7525 ceiling of the current rising channel, to accelerate the revisit of record highs. Bears are eager for a retrace towards the 7450 floor of said channel. Watch levels: Bullish 7525, Bearish 7490

Calls for a positive start to the new trading week come thanks to Asian equities taking a lead from more record highs on Wall last Friday. This derives from fresh optimism (or an easing of concerns) about US Tax reform being delivered before Christmas, to give Trump that much needed but elusive legislative win.

Whilst USD rallied initially on the fresh positivity, it is nonetheless off its best levels, giving GBP (and EUR) a lift which may prove a UK Index   (and DAX) hindrance. However, note strength for Financials, Tech and Materials in Japan and Australia overnight, echoing US tax-inspired gains.

In corporate news, BHP Billiton and Exxon Mobil to compete in marketing gas from Aussie JV from 2019. Unilever sells Spreads business to KKR for €6.4bn (late Friday). Rio Tinto turns to more driverless trucks in efficiency push. easyjet acquires part of Air Berlin operations at Tegel airport. AstraZeneca: FDA Grants Tagrisso Priority Review status. Great Portland Estates sells 240 Blackfriars Road, SE1 for £266.5m. 

Hunting says EBITDA likely to be nearer the upper end of market expectations. Ophir and Fortuna FLNG partners prioritise alternative funding from leading Asian bank for up to $1.2bn. Superdry Sport appointed Official Clothing Supplier to UK delegation for 2018 Invictus Games in Sydney. 3i Infrastructure sells Anglian Water Group stake for £395m. Babcock International wins 10-year Sellafield contract.

US equity markets closed at record highs across the board on Friday, buoyed by the prospect of tax reform before Christmas. The Tech-focused Nasdaq outperformed, climbing 1.2% to an all-time best close, while Financials, Retail, Healthcare and Tech lifted the S&P 500 close to 1% higher, and the Dow Jones rallied 0.6% thanks to gains for United Technologies, The Travellers and Microsoft.

Crude Oil benchmarks are rallying on the weaker US dollar, with both major measures approaching key December resistance levels. Global benchmark Brent is attempting to regain a $64 handle for a return to last week’s multi-year highs, while its US counterpart looks to extend its rally from Thursday’s $56 lows.

Gold is testing resistance at Friday evening’s highs as political uncertainty and a retreating US dollar ahead of key tax reforms underpins the safe haven asset. The precious metal is trading just shy of $1258.8, with traders eyeing last week’s fortnightly highs should a breakout take place, while failure could see a return to Thursday’s $1251.5 lows.

With a relatively light macro data docket today, and indeed for the most part of the week, in focus today will be progress made by US lawmakers towards a key $1.5 trillion tax reform bill, an agreement expected before the end of this week. Ahead of bill being signed into law, any more updated guidance from US corporates, showing potential earnings improvement from the reform, will be closely watched, especially from expected major beneficiaries such as domestically-focused Oilers, Airlines and Banks. We also get results from global economic barometer FedEx tomorrow.

Data-wise, Eurozone Consumer Price Inflation (CPI; 10am) may show little change in November (0.1% MoM), with a slight improvement annually (1.5% vs 1.4%), although the core metric probably held at 0.9% YoY for a third straight month, well off the pace of the summer’s 4-year best of 1.2%. UK CBI Industrial Trends Orders (11am) are forecast lower in December following November’s jump to 17, its highest since 1998, but suggesting still strong demand.

This afternoon, the US NAHB Housing Index (3pm) is expected flat at 70 in December, holding an eight month high and just shy of March’s 71 best since June 2005 (72). For better than that you have to go back to 1999.

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