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

UK 100 Index called to open -75pts at 7205, having sold off sharply last night to break yesterday’s rising lows support at 7220. Bulls need a break above this to foster hopes of recovery towards 7300 resistance. Bears require another test of 7190 overnight lows to start a 100pt bearish flag pattern lower.  Watch levels: Bullish 7220, Bearish 7190

Calls for a sharply lower open stem from a Fed minutes-inspired sell-off on Wall St, echoed in Asia, as investors adjusted to the central bank’s optimism on US growth which may result in it being forced to hike interest rates faster than expected (too much?) to keep inflation in check.

While the resulting stronger USD (break beyond Dec falling highs resistance?) means a weaker GBP and EUR, this isn’t helping the UK Index or DAX, the former having high commodity exposure and thus sensitivity to the US currency. Pressure on Copper and Oil prices are thus weighing.

Corporate news this morning: Barclays FY litigation and conduct charges of £1.2bn (£700m PPI), £900m US tax change charge, £1.9bn net loss, flat 3p div for 2017 (intends to pay, 6.5p in 2018); FICC division performance no worse than rivals.

Centrica highlights poor US performance, UK political and regulatory  intervention and aggressive competition; FY adj. op. profit -17%, net debt lower, dividend flat. British American Tobacco FY revenues and profits up 35-40% look light of consensus; div +15%. BAE Systems underlying profits beats expectations, dividend a touch light, pension deficit reduced, improving outlook for defence budgets in several markets.

RSA Insurance Underlying FY EPS +10%, FY dividend +23%, lower debt, expect markets to remain competitive with modest growth overall; Weather and large loss ratios hard to predict. Anglo American FY cash flow +93%, underlying EBITDA +45%, net debt higher than consensus.

US equity markets pared early gains to close lower after the release of Fed minutes pushed US bond yields to a 4-year high. With the minutes pointing towards strong US and global growth, the Fed noted need for further interest rate hikes. As a result, the Dow Jones closed 0.7% weaker as Home Depot and Wal-Mart continued to fall, while Real Estate dragged the S&P 500 0.6% lower and the Tech-heavy Nasdaq finished down 0.2%.

Gold is trading lower overnight having spiked to $1336 support turned resistance after the release of Fed minutes yesterday evening. That initial spike, however, gave way to fresh USD dollar strength, keeping the precious metal within its week-long falling channel. Trading at 1-week lows, the commentary from Fed voters this afternoon may influence USD and thus Gold.

Crude Oil benchmarks are lower, however are trading off overnight lows as API reports a surprise draw in US crude oil inventories, although a build in Distillates and Gasoline took the shine off the report. Alongside a rallying US dollar, Brent Crude retreated to an overnight low at rising lows support of $64.75 before rallying back above $65, while US crude dipped to lows of $60.7 before climbing back above $61.

In focus today will be UK Q4 GDP (2nd Est; 9.30am), with consensus looking for a quarterly acceleration but a slight cooling annually. The key Services segment is forecast to have slowed in Dec while Business Investment holds firm at 0.5% in Q4.

After mixed ZEW surveys on Tuesday, the latest German IFO (9am) prints could move the EUR and German DAX should they fall more than expected or deliver a surprise improvement. Similarly, after Tuesday’s lower UK CBI prints (especially prices paid for the inflationary read-across), today’s CBI Sales (11am) could impact both GBP and the UK Index .

Although it is still only tapering its QE programme, the latest ECB Minutes (12.30pm) will be analysed for any hints about the pace of further reductions as well as the governing council’s views on the trajectory of the bank’s remaining monetary policy normalisation.

This afternoon’s US data includes Jobless Claims (1.30pm), Leading Index (3pm) and Kansas City Manufacturing (4pm) – all forecast to post improvements. To close the day, US EIA Oil inventories (4pm) have potential to echo or contrast last night’s API which delivered a surprise drawdown for Crude and larger than expected draw for Distillates, while a slightly bigger than expected build for Gasoline.

Speakers today include German Chancellor Merkel (8am) this morning before a Fed trio this afternoon/evening. New York’s Dudley (3pm; centrist, voter, but retiring) speaks at a New York Fed’s Economic Press Briefing on Puerto Rico and the US Virgin Islands. Atlanta’s Bostic (5.10pm; centrist, voter) participates at the 2018 Banking Outlook Conference in Atlanta. Lastly, Dallas’ Kaplan (8.30pm; centrist, non-voter) participates in a moderated Q&A at the Greater Vancouver Board of Trade: “Beyond NAFTA? Safeguarding our Trading Relationship”.

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