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

UK 100 Index called to open -15pts at 7390, just above overnight lows but holding last week’s 7385 breakout. This gives hope to the bulls that it will prove a platform for a rebound towards 7500, although recent 7430 highs need to be overcome first. Bears are just waiting for a breach of 7385 to open the door for a return to July 7300 lows. Watch levels: Bullish 7395, Bearish 7380.

Calls for a negative open derive from continued US Dollar weakness hampering equities by way of reciprocal currency strength for both GBP and EUR – a fresh 2yr high for the latter that may see the DAX underperform. This follows Trump’s healthcare bill failing to get congressional approval yet again, leaving him with nothing to show for his first semester in office and sapping confidence in what can be delivered through year-end. US data also disappointed yesterday, adding to the Fed’s quandary.

After a lacklustre US close, Asian markets have posted losses overnight, with Yen strength hampering Japan’s Nikkei. Gains for the Aussie Dollar and weakness among financials (2yr highs; USD weakness + optimistic but reluctant-to-hike RBA minutes) have pushed Australia’s ASX to underperform, while oil comes off is highs and certain metals pause despite USD weakness, dealing an additional blow.

UK Index corporate news this morning includes Royal Mail posting a good start to the year with 1Q group revenues +1%, but pricing pressure means Parcel volumes +5% at odds with revenues +3% and Europe still carrying the UK. Carillion announces two further contracts wins worth £158m. Experian 1Q organic revenues +4%, reiterates FY18 guidance.

British Land says it is to buy back up to £300m shares in FY18. Rio Tinto’s production update suggests a solid quarter, including record output in bauxite, although in-line iron ore production was offset by lower shipments, impacted by rail maintenance.

US companies reporting today include Dow Constituents Goldman Sachs, IBM (after-market), Johnson & Johnson and UnitedHealth, while we also have Altaba (Yahoo!) reporting its maiden figures alongside the Bank of America and United Airlines owner United Continental (after-market).

After a lacklustre US close, Asian markets have posted losses overnight with Yen strength hampering Japan’s Nikkei. Gains for the Aussie Dollar (2yr highs; a product of both USD weakness and optimistic but rpositive RBA minutes) push the Australia’s ASX to underperform with losses for financials oil off is highs and a pause for metals dealing the index an additional blow.

US equity markets finished Monday’s session virtually unchanged as the sinking of the Republican Healthcare Bill saw all major bourses pare early gains. The Nasdaq was the only index to close above water, maintaining a seven session win streak as earnings remain in focus, while the S&P500 and Dow Jones retreated marginally from last week’s record highs as Trump-based sentiment took yet another hit.

Crude Oil prices have steadied having coming under pressure in US trading yesterday, being underpinned by fresh weakness in the US dollar following another Republican legislative failure. Concerns about OPEC compliance with production cuts had seen both Brent and US benchmarks retreat from 2-week highs yesterday evening towards rising lows support at $48.40 and $46 respectively.

Gold has continued to edge higher as the US dollar falls to fresh 10-month lows. The fresh greenback weakness, coming after the Republican Healthcare Bill is officially declared ‘dead’, makes the relative price of the precious metal cheaper, however the safe-haven asset has come off its highs as the greenback is lifted from its lows, falling to support at $1236.5.

In focus today will be UK Inflation (9.30am) with CPI forecast unchanged in June but still too hot (2.9% YoY, 2.6% Core; 4yr highs) for the Bank of England leaving it a quandary with consumers squeezed by rising prices and slowing wages due to Brexit uncertainty and a weaker GBP.

Note, however, GBP’s recent rally vs USD and an easing in RPI and both PPI Input and Output Cost growth which may give hope of an easing in pricing pressure. UK House Price growth is forecast to have slowed in May.

Elsewhere, German and Eurozone ZEW Surveys (10am) are seen virtually unmoved in July, while this afternoon US Import and Export Prices (1:30pm) provide one of the final inflationary prints before next week’s Fed update (Imports slower, Exports rebound). The US NAHB Housing Index (3pm) is expected unchanged, holding its 2017 average.

Bank of England Governor Mark Carney launches the first polymer £10 note at Winchester Cathedral today (2:30pm) on the 200th anniversary of the death of the new note’s occupant Jane Austen. If Carney follows the same format as the £5 Churchill launch, no comment on monetary policy is expected.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Gold at 2-wk high as cloudy U.S. rate hike outlook drags on dollar
• Royal Mail says qtrly revenue up 1%, on strength in GLS
• British online trading firm IG reports rise in annual profit
• IG Group Holdings FY net trading revenue up 8%
• Dairy Crest says Q1 trading in – line, FY outlook unchanged
• Carillion says joint venture awarded two further HESTIA contracts
• British Land Company ‍announces £300m share buy-back programme​
• Banco Santander to vote in favour of Monitise, Fiserv deal
• Average price of UK motor insurance hits record high in Q2 – ABI
• Bloomsbury Publishing sees FY profit in line with expectations
• Experian reports 6% growth in Q1 total revenue constant currency
• Australia’s Rio Tinto falls; lowers 2017 iron ore shipments guidance
• Copper prices inch up, extend gains on strong China GDP
• Oil prices tread water as ongoing supply glut is met by firm demand