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

UK 100 Index called to open +25pts at 7415, with an overnight rally from 7380 adding to rising lows from recent 7360 support. This keeps Bulls optimistic of a breakout to escape a 4-day sideways consolidation, opening the door for a rally to 7460/7560/7600. Bears point to falling highs resistance from late June, watching for another bearish reversal and retrace, not just to 7360 but all the way back to 7300. Watch levels: Bullish 7435, Bearish 7400.

Calls for a positive open can be attributed to overnight gains in Asia and a mixed close on Wall Street that nonetheless produced yet more record highs (Nasdaq, S&P). This as despite allegations of Trump having a private G20 meeting with Putin, the healthcare bill collapsing and more disappointing US data that puts a hiking Fed Chair Yellen in a bind.

Leading the way overnight were Aussie banks on news of less severe capital requirements, helping Australia’s ASX outperform despite persistent Aussie dollar strength derived from its US namesake index languishing around 10-month lows. The latter also continues to hamper Japan’s Nikkei by way of reciprocal Yen strength while losses for financials challenge consumer staples gains.

In commodities, Oil is off its best levels after a surprise US API inventory build, iron ore has extended its bullish flag breakout, copper is firm (nearing apex of bullish pennant) despite a USD rebound which has understandably taken Gold from its highs.

Bluechip news includes Aviva selling its Friends Provident brand for up to £340m after a strategic review to focus on fewer markets. Severn Trent has upped its business services division guidance following disposal of its US business. Reckitt Benckiser is to sell its food business for $4.2bn to US McCormick & Co. BHP Billiton sees FY18 iron ore output up 3%-5%; FY18 at bottom end.

US companies reporting later today include Dow components American Express, banking major Morgan Stanley and former curtain-raising aluminium giant Alcoa. Also of note are Reynolds American (sector peer for UK Index -listed British American Tobacco and Imperial Brands), Qualcomm and T-Mobile US.

US equity markets finished mixed on Tuesday as corporate earnings resulted in diverging performances between major indices. The Nasdaq outperformed, closing at a record high while notching its longest winning streak since 2015 as Netflix rallied 13% to a fresh all-time high. The S&P500 also notched a record closing high, albeit by only 1.5 points, while a disappointing earnings report from Goldman Sachs weighed on the Dow Jones as it closed lower.

Crude Oil prices are little changed overnight, with the impact of a surprise build in API inventory data offset by the US dollar continuing to trade close to 10-month lows. As a result, both Brent and US crude remained within tight ranges since Friday (Brent $48.30-$49.40; US $45.80-$46.90). Today’s breakout catalyst may lie with official US EIA Inventories and Production data at 3.30pm today, as has been the case almost every since since early June.

Gold has fallen back from $1244 overnight in response to more US equity records and the USD bounce from 10-month lows. Investors are also looking to tomorrow’s ECB policy update and any hints on QE tapering that may influence demand for the yellow metal. Support at $1239 thanks to intersecting rising lows from late January, is helping so far, however traders will likely want to see a break above $1244 before getting too excited.

In focus today will be Prime Minister’s Questions (12:30pm) where Theresa May is back in the firing line having been represented by deputy Damien Green last week. With the summer recess looming and the second round of Brexit negotiations having just begun, the PM needs a strong performance to shore up her position amid talks of cabinet infighting.

Data-wise, this morning we have Eurozone Construction Output (10am), the pace of which has been waning over the last two months. This afternoon, June US Housing Starts and Building Permits (1:30pm) are expected back to growth before Weekly US Oil Inventories and Production (3:30pm) which have much potential to spice up market sentiment into the European close.

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

• Ashtead Group Acquisition of CRS Contractors Rental Supply
• Aviva to Sell Friends Provident to RL360 Holding for Up to £340M
• Berenberg Starts Hollywood Bowl, Ten Entertainment at Buy
• BP considers MLP and IPO for midstream operations
• CMA Considers Fare Controls on FirstGroup’s London-Exeter Line
• Drax Posts 1H Pretax Loss on Higher Depreciation, Costs; Keeps 2017 Ebitda Target
• Evraz 2Q Steel Production Falls Due to Plant Repairs  
• McCormick buys Reckitt Benckiser food business for $4bn-plus
• QinetiQ Confirms FY Outlook
• Severn Trent Lifts Business Services Division Guidance
• TalkTalk Telecom Trading in Line With Expectations
• Wizz Air 1Q Pretax Profit Rises, Sees FY Net Profit at High End