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

UK 100 Index called to open -5pts at 7240, back testing overnight highs and yesterday’s close, but still struggling under falling highs resistance albeit shallower than it was yesterday. Narrowing pattern could be consolidation before another leg lower. Bulls need a break above 7260 while bears require a breach of rising support at 7210. Watch levels: Bullish 7260, Bearish 7210

Calls for a slightly negative open stem from a weak lead from the US (back from holiday) as major indices snapped their post-correction winning streak, and investors ignore a largely positive Asian session. While the US dollar rebound will aid a swathe of foreign-exposed UK 100 stocks, its reciprocal impact on commodities (Oil & Copper) is overpowering sentiment for the heavyweight UK Index Miners and Oilers, the former having traded lower in Australia overnight.

Corporate news this morning: Lloyds FY revenues in-line, pre-tax profits miss, extra £600m PPI provision in Q4, FY dividend +20%, up to £1bn share buyback. Glencore adj FY EBITDA +44%; Op cash flow +49%; Divs $2.9bn (2 equal payments), above consensus; Net debt -31%. Barratt Developments H1 revenues +9.5%, pre-tax profits +6.8%, completions and forward sales both +2%, Interim dividend +17.8%.

Fidessa accepts £1.4bn Temenos acquisition offer. Unite Group 2017 revenues -1.1%, profits +13.9%; increases payout ratio, final dividend +28.3%, plans to raise £170m. Hochschild Mining FY production and revenues rise, but profits fall. AA strategic update includes cut to guidance, reduces dividend. Metro Bank makes FY profit, does more business, but net interest margin falls.

US equity markets closed lower yesterday after returning from the extended Presidents’ Day weekend, snapping a 6-day streak of higher finished. The Dow Jones closed over 1% lower as Wal-Mart suffered its single worst session since 1988, falling over 10%. The S&P 500 finished 0.6% lower as sector contagion took hold, with Kraft Heinz joining Wal-Mart in leading consumer staples lower, while the Tech-heavy Nasdaq closed just shy of breakeven.

Gold has extended its breakdown from $1336 support, continuing to be dragged lower by the stronger US dollar. With the greenback now at a 1-week high, the precious metal has followed suit in trading a 1-week low, although is trading marginally off overnight lows of $1325. The dollar will continue to dominate sentiment for the precious metal, and will likely react to this afternoon’s US macro data.

Crude Oil benchmarks are trading at lows of the week after failing to better Friday’s highs, as a continued surge in the US dollar offsets positivity that OPEC will extend production cuts beyond 2018. With that said, however, both Brent and US crude have found tentative support, the former trading slightly off overnight lows of $64.7, while the latter recovering slightly from overnight lows of $61.1.

In focus today, in light of the recent wages/inflation/yield-creep tantrum that took markets from their highs, will be the Fed FOMC Minutes (7pm) from January, hopefully providing more clarity on committee discussions about 2018 rate hikes, which could shift the USD.

After a hawkish policy update, what Bank of England Governor Carney (2.15pm) and team have to say will be of particular interest for GBP and UK Index Index/equity traders.

In terms of data, preliminary February PMI Manufacturing and Services will be looked to for clues about growth. France (8am), Germany (8.30am) and the Eurozone (9am) are all expected to post small pullbacks in both metrics. The USA (2.45pm), however, may hold firm for Manufacturing but show improvement for Services, before higher Existing Home Sales (3pm) this afternoon.

Closer to home, UK Unemployment (9.30am) is always important, but with the Bank of England preparing to hike rates to fight persistently above target inflation (3% vs 2% target), similarly persistent high wages growth (2.5%) may merely add weight to expectations of an imminent move.

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