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

UK 100 Index called to open +40pts at 7815, having broken above January’s prior 7804 peak to extend the current rising channel to an impressive 8-weeks. Bulls need a break above 7850 overnight highs if they are to test 4.5yr rising highs intersecting at 7890. Bears require a break of 7804, if not rising support at 7780 for a downside test. Watch levels: Bullish 7850, Bearish 7780

Calls for a higher open comes after a positive start to the week in Asia, boosted by comments from US Treasury Secretary Mnuchin about a US-China trade war being “on hold” and the White House pulled back on imposing $150bn tariffs on Chinese exports. No concrete outcome yet, but Beijing expected to agree to import more goods from the US ($200bn being discussed; agriculture +35%).

Oil mostly flat, Brent back below $80, but still around 3.5yr highs, supporting UK Index Energy, while gold prices fell back below $1290 as the USD strengthened against a basket of currencies and investors eschewed safe havens, unperturbed by Italian coalition risk. USD strength pushing GBP lower to the delight of the internationally exposed UK Index too, flattering the value of its profits and dividends.

In corporate news this morning, Ryanair delivers FY19 profits warning, “outlook on the pessimistic side of cautious”, higher costs, limited fare visibility, pricing soft, expects lower profits, still dependent on fares, disruption security and, Brexit. Elsewhere in Airlines, IAG plans to offer €1.52bn (32% premium) for Norwegian, Expansion says, citing unnamed sources.

AstraZeneca gets US FDA approval for Lokelma in adult hyperkalaemia and makes Japanese regulatory submission for Forxiga in type-1 diabetes following EU submission acceptance in March. Allergy Therapeutics says grass allergy treatment trial sata was positive.

Kosmos Energy provides Suriname activity update. SolGold announces new high-grade copper and gold discoveries in Ecuador’s Southern Jurassic porphyry corridor. De La Rue to collaborate with Canada’s Optel on new product development to fight counterfeiting. Playtech brings forward €850m Snaitech acquisition after Italian regulatory approval.

In focus this week, for lack of major economic releases today (Whit Monday bank holiday in France and Germany), will be UK Inflation data (Wednesday, 9:30am), which is expected to rise slightly, providing further evidence for UK economic outlook ahead of the BoE’s June 21 interest rate meeting. Flash Services/Manufacturing PMI data from France, Germany and the US on Wednesday will serve as a leading indicator for economic conditions in major Western economies.

Later in the week will see the release of UK April Retail Sales (Thursday, 9:30am), expected to show recovery after March contraction precipitated by poor weather and Easter timing. On Friday, we get the second estimate for UK Q1 GDP, expected to confirm slowdown, unfavourable news to those clamouring for a BoE rate hike this year. Finally, we will also see releases of consumer confidence data from Eurozone (Wednesday), Germany (Thursday), both expected lower, and the United States (Friday), expected unchanged, as well as German IFO business climate surveys (Friday).

Major speakers today will include a few Federal Reserve bankers, including Bostic (5:15pm, centrist, voter), Harker (7:15pm, centrist, non-voter), as well as Kashkari (10:30pm, dovish, non-voter)

No major US companies reporting today, but this week we get updates from big names such as Hewlett-Packard and a host of retailers (Autozone, Kohl’s, L Brands, Lowe’s, Target, TJX, Best Buy, Gap and Sears).

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