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

UK 100 Index called to open -25pts at 7285, back below 7300 after an overnight reversal of Friday afternoon’s rally and breakout. Bulls need a break back above 7300 to revive hopes of a return to Aug falling highs at 7390. Bears hope this breakdown will result in a full retrace towards Friday’s lows of 7235. Watch levels: Bullish 7300, Bearish 7280.

Calls for negative European open follow a mixed session in Asia in response to a less convincing Federal election win for German Chancellor Merkel and French President Macron struggling in Senate elections – both denting the euro – coupled with a UK sovereign debt downgrade by Moody’s, on Friday, just hours after PM May’s Brexit speech, and aggressive rhetoric from North Korea’s foreign minister at the UN on Saturday.

In Asia, Japan’s Nikkei outperforms thanks to continued Yen weakness from Friday. Australia’s ASX is flat as the commodity sector continues to hold it back. China in the red while Hong Kong underperforms.

In UK Index news: Unilever agrees to acquire Carver Korea for €2.27bn. BP starts production from Oman Khazzan field ahead of schedule and under budget. Indivior enters into settlement with Mylan Pharmaceuticals in a patent infringement case related to Suboxone sublingual film.

Tullow Oil will to resume drilling in offshore fields under Ghanaian jurisdiction after resolution of a maritime border dispute with Ivory Coast. Imagination Tech agrees to 182p offer (42% prem) from China backed fund. Pennon Group on track to meet H1 expectations for both water and waste.

US bourses closed mixed around the breakeven mark in the final trading session of the week, with large-cap Tech sector weakness weighing while Healthcare strength attempted to offset losses. The Dow Jones finished marginally lower as Apple continued to fall, ending its worst week in almost 18 months, while both the S&P 500 and Nasdaq closed higher as Healthcare and Energy sectors gained.

Crude Oil prices are continuing to move higher, although both major global benchmarks are once again diverind. Brent Crude is the clear winner, extending its sharp rally higher to a fresh 5.5 month high, while its US equivalent continues to narrow between $50.4-50.7. Brent will have to overcome resistance at April highs of $57 to keep the rally alive, while a break from the narrowing pattern could see US crude move $1 either way.

Gold has fallen from the ceiling of its $1288-1298 narrowing channel as Angela Merkel wins her fourth term as German Chancellor, averting a possible shock result. As well as quashing safe-haven seeking this has proved beneficial for the US dollar, opening sharply higher at the expense of the Euro, increasing the relative price of the precious metal. The greenback will likely remain a key driver throughout the day.

In focus today will be digestion of Moody’s UK debt downgrade hot on the heels of PM May’s Brexit keynote speech on Friday, which received a mixed reception across Europe.

Data-wise, German IFO Surveys (9am) will be of interest (Business climate forecast holding near all-time highs), especially in light of a Federal Election result that keeps Chancellor Merkel (and her CDU party in power but with a weaker hand (32.7% share; -8.8pts). The result is likely to mean a new ‘Jamaica’ coalition (CDU+FDP+Green; 52.6% share) after Schulz flipped his SPD party (20.2%; -5.5pts) from grand coalition partner to opposition while the far right AFD’s surge into parliament (13.4% share;  +8.4pts) serves as another reminder of rising EU populism.

This afternoon, US data comprises the Chicago Fed National Activity Index (1:30pm) and Dallas Fed (3:30pm). No consensus for the former which pulled back to breakeven last month. The latter, however, is seen dropping – after relative stability since March, to its lowest since last November.

Another packed speaker schedule sees a trifecta of US Federal Reserve voters, Dudley (1:30pm), Evans (5:40pm) and Kashkari (11:30pm), punctuated by the ECB’s Coeure (3:45pm) and the Reserve Bank of Australia’s Bullock (10:15pm).

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• • Unilever agrees to acquire Carver Korea for €2.27bn
  • AstraZeneca to File Bevespi Aerosphere Applications in Japan, China
  • BP Begins Production at Khazzan Gas Field, Oman
  • Plexus Wins Production Well Order From Centrica
  • Pennon Group On Track to Meet H1 expectations
  • MJ Gleeson Sees Profit Rise 17% on house and land demand
  • Indivior settlement with Mylan
  • Imagination Tech receives 182p offer from China backed fund
  • Tullow Oil to resume drilling in Ghana