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

UK 100 Index called to open +45pts at 7760, rebounding from yesterday’s 7710 low to challenge the ceiling of 2-day falling channel from Monday’s record peak. Bulls need a break above 7780 to inspire confidence that a 2.5% correction sufficed to consolidate the 15% rally from late March. Bears require a break below 7750 to hint at a revisit of yesterday’s lows. Watch levels: Bullish 7780, Bearish 7750

Calls for a positive open come in spite of minor losses in Asia, where investors were skittish after President Trump cancelled the US-NK summit, blaming “open hostility”. However, North Korea has already offered an olive branch, saying “still open” to negotiations, helping Asian markets and Wall St pare losses.

UK Index support derives from GBP weakness, reversing yesterday’s Retail Sales inspired jump, after Brexit talks broke down in acrimony in Brussels. UK ultimatums on unrestricted access to the Galileo satellite project were criticised as “fantasy”, the UK wanting membership benefits without corresponding responsibilities. BoE Governor Carney also warned last night that a disorderly Brexit might require another interest rate cut to support the economy..

Despite geopolitical concerns, gold is off its “summit-cancellation” highs, pushed lower by fresh USD strength (world’s reserve currency and thus a safe haven of sorts), adding to reciprocal GBP weakness to help the UK Index . Energy may remain under pressure after oil traded lower on both a stronger USD and hints from OPEC and Russia about winding down voluntary production cuts to offset supply disruptions (Venezuela/Iran).

In corporate news this morning, SSE cuts dividend outlook; FY 17/18 adj. operating profit -2.4%, adj. pre-tax profit -6%, adj. net debt +8.7%, final and FY div +3.7%; expects 2018/19 div +3% (RPI), 19/20 -18% after nPower transaction and Tariff Cap, then 20-23 increase at RPI

AstraZeneca and MedImmune say Imfinzi met second of two primary endpoints in Phase III Pacific trial, significantly improving overall survival rate in stage III non-small cell lung cancer (NSCLC).  Pennon FY 2018 pre-tax profit +25% beats consensus, revenues in-line; dividend +7.3%; outlook for water and water is positive.

Spectris CEO of 12 years to leave within 12 months; Like-For-Like sales +6% in first four months of 2018; 5% FX drag on sales means net 2% growth (incl. acquisitions), in-line with guidance but order book visibility limited; net debt higher after acquisition, buyback and CAPEX.

Centamin cuts production guidance for Sukari Gold mine due to persistently low grades, expects weaker Q2 but strong Q3 and Q4. Capita gets 97.25% acceptance for rights issue.

In focus today will be the second estimate for UK Q1 GDP (9:30am), expected to confirm slower growth than Q4, impacted by inclement weather.  German IFO Surveys (9am) are expected to show an improvement in German business climate.

In the afternoon, US Durable Goods Orders (1:30pm) are forecast to show slight improvement excl. Transportation followed by University of Michigan economic sentiment (3pm) expected unchanged.

Lots of Central Bank speakers today, including ECB’s Villeroy (8am), speaking about Paris as a financial centre, followed by colleagues Weidmann and Coeure (2:15pm) on a panel at the Swedish Riksbank.

However it’s the chiefs who will be in focus, with BoE Governor Carney and Fed Chair Powell speaking at 2:20pm, at the Riksbank’;s annual conference, Powell on the “Financial Stability and Central Bank Transparency” panel.

An EU Finance Ministers conference will be ongoing throughout the day, to cap off several days of EU/UK Brexit talks that ended on Thursday in bitter acrimony.

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