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

UK 100 Index called to open -40pts at 6910, well off its worst levels (6840), but still having breached major support yesterday, extending the second leg of 2018’s reversal. Bulls need a break back above Feb’s breached 6920 support. For another jaunt lower, Bears need to see 6920 turn resistance and then a break below the 6890 breakout of the last hour. Watch levels: Bullish 6920, Bearish 6890

Calls for a negative open come after President Trump enacts tariff plans targeting China (Europe exempt) heightening fears of a global trade war. This saw US bourses fall sharply last night echoed by a very weak Asian session overnight. Add to this another change in the White House with National Security Advisor McMaster replaced by military hawk Bolton and sentiment has taken a real tumble at a time when markets are still getting their heads around monetary policy normalisation. Safe havens like Gold and Yen both benefiting at the expense of risk assets.

Corporate news this morning: Next FY Retail revs -7.9%, profits -24%, Online +9.2%/+7.4%, Total -0.5%/-8.2%, div flat, pricing environment seen much more benign, “very early in year to be giving sales guidance by division”, 2019 guidance: total full price sales +1% (retail -8.5%, on-line +10.3%), pre-tax -2.9% (higher costs), EPS +1.4% thanks to buybacks, backs Jan guidance for FY19.

Smiths Group H1 revenues -4% (-1% underlying), pre-tax profit -12%/-3%, free cash flow -36%, dividend +1.8%, strong order book, confident in group growth acceleration, 2018 outlook reaffirmed (at constant FX) but FX to remain headwind.

Aviva says it won’t cancel preference shares following strong investor criticism. Fevertree Drinks’ co-founder sells twice as many shares as expected. GlaxoSmithKline’s shingles vaccine approved in Europe, Japan, and it withdraws from process relating to Pfizer’s Consumer Healthcare business.

US equity markets fell sharply overnight as the US imposed tariffs of up to $60bn on Chinese goods, reigniting fears of a global trade war which saw indices’ worst session since early February. The Dow Jones retreated 2.9% as all 30 stocks closed lower, with key industrial exporters Boeing and 3M suffering the most. The S&P 500 saw Financials and Tech underperform, leading the index 2.5% lower, while the Tech-heavy Nasdaq finished 2.4% weaker.

Gold has climbed to a fresh 1-month high, despite the US dollar recovering from post-FOMC lows, as investors flock to safe-havens after a global equity sell-off overnight. The precious metal broke above previous March highs of $1341 around 5-6am, capping a 1.4% rally from yesterday evening’s lows after the European close. Further weakness in European markets this morning may help the safe haven attract more buyers.

Crude Oil benchmarks have edged higher overnight as a wave of profit taking from near 2-month highs subsides, further helped by the US dollar retreating after the imposition of US tariffs on a range of Chinese goods. Global benchmark Brent notched a fresh March high above $70 before retreating back below the key level, while US crude has fallen back below $65 having traded an overnight high of $65.3.

In focus today will be the fallout from a spate of firings in the White House overnight, as well as the imposition of $50bn of tariffs on Chinese goods by US President Donald Trump. The latter, in particular, drove US markets sharply lower on Thursday which has spilled over into Asia. Furthermore, appointing another policy hawk to a senior role in the White House, this time the pro-intervention John Bolton as National Security Adviser, it raises concerns that the administration’s right-leaning entities are gaining a foothold over more moderate elements championed by ex-employees Cohn, Tillerson and McMaster.

Data-wise, you’ll have to wait for this afternoon’s US Durable Goods Orders (12.30pm), forecast to rebound in February from January’s weakness, both for the Headline metric and ex-Transport. The same is likely true for New Home Sales (2pm), bouncing back from two months of declines, and important as a gauge of consumer confidence. Watch USD.

Speaker-wise, we have the EU leaders summit in Brussels, from which we should hear more on the Brexit transition agreement. After yesterday’s more hawkish Bank of England vote (2 MPC members wanted a hike), the BoE’s quarterly bulletin (12pm) will be looked to for more clues/proof about whether May will see the next UK rate hike. Lastly, in the wake of mixed messages from the Fed’s Wednesday policy update, Fed speakers Bostic, Kashkari, Kaplan and Rosengren will be listened to attentively throughout the day.

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