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

UK 100 Index called to open -10pts at 7530, back from yesterday’s bullish test of 7555 and a failure to get back above 7540 overnight. Bulls need to get above this level and for a meaningful break above 7550. Bears want to see a test of October rising support around 7515. Watch levels: Bullish 7540, Bearish 7515.

Calls for a negative open derive from USD remaining under pressure to the benefit of GBP, acting as a hindrance for the internationally exposed UK Index . This even after Asian bourses followed a bullish lead from Wall St (more records) and China reported solid GDP – slower than last quarter, but well on-track to beat its FY target.

Downunder, Australia’s ASX is held back by a flat oil price after the mixed US EIA report hampering Energy while dual-listed Miners remain under pressure from RIO legal issues and BHP production output. Japan’s Nikkei outperforms thanks to USD strength keeping pressure on the Yen to help exporters. Hong Kong and China nurse losses as the 19th Communist party congress continues.

Corporate news includes Unilever Q3 impacted by bad weather, developed markets challenging, emerging markets improving, backs guidance. Travis Perkins trading remains mixed, discretionary spending under pressure from rising inflation and on-going uncertainty in UK, guidance unchanged.

Schroders AUM +8.8% YTD to £430bn. CEO Xavier Rolet to leave London Stock Exchange by end of Dec 2018. Segro positive momentum continues, appetite for prime warehouse assets remains strong, supportive backdrop for 2017-18.

Crude Oil prices hover around $52.2 (WTI) and $58 (Brent) after a mixed US EIA inventory print that proved less bullish than Tuesday’s API report and despite OPEC leaning towards a 9-month supply cut extension. A big EIA crude draw-down was offset with a build for gas and distillates, although production did show a meaningful drop. Markets calm despite the threat of supply disruption (Iraq/Kurdistan) as shale/frackers now act as defacto swing producers, attracted by prices at or close to 2017 highs.

Gold has found support at $1277 but remains under pressure from the bearish head & shoulders top reversal we highlighted from $1290 on Monday. Bearish descending triangle? There is potential for further declines, towards October $1262 lows, thanks to a falling channel from last week’s $1305 peak. Especially if the USD remains strong, amid expectations of a December Fed rate hike, and equity markets push fresh highs, sapping demand for the safe haven in spite of lingering geopolitical uncertainties.

In focus today will be digestion of that overnight Chinese data and what it means for sentiment towards global growth, the EU summit (ex-UK) in Brussels where Brexit will be discussed and the deadline for Catalonia to give a definitive answer on independence or face direct rule from Madrid.

Thereafter, with UK inflation pushing the Bank of England towards an interest hike in November, but wages failing to keep up, further squeezing the UK consumer, the strength of UK Retail Sales may or may not add fuel to the fire. Consensus is looking for a negative print for September. Anything much better would just merely support the case for a hike.

In the afternoon, the US Philadelphia Fed is forecast a touch lower in October, along with Jobless Claims and the US Leading Index while the Fed’s George speaks  on “The U.S. Economy: Rural and Urban Growth” in Oklahoma with an audience Q&A.

US companies reporting: financial Bank of New York Mellon, investment firm Blackstone, PayPal, Imperial Brands and British American Tobacco peer Phillip Morris, and telecoms giant Verizon.

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