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

UK 100 Index called to open -20pts at 7415, having retreated further from Monday’s peak, but off its lows after once again finding support at last week’s lows of 7400. Bulls are cheered by rising lows since mid-month and are looking for a break above 7430. Bears are concentrating on this week’s downtrend, looking for 7400 support to be challenged. Watch levels: Bullish 7425, Bearish 7400.

A negative opening call comes after a mixed Asian session on the back of Wall St losses. The UK Index is called lower on account of GBP/USD holding up around recent highs, reducing the currency benefit to its significant international contingent, coupled with concerns about disappointing oil inventory data this afternoon to buck the recent oil price rebound.

Strong GBP/USD is down to USD weakness rather than GBP strength, driven by a combination of ECB President Draghi driving the EUR higher with surprisingly hawkish rhetoric yesterday, more disappointing US data yesterday and yet another vote delay for Trump’s US healthcare bill sapping yet more confidence in his grand policy and stimulus plans.

Japan’s Nikkei is lower despite a weaker Yen and Energy liking to look of an oil price turnaround. Australia’s ASX is the lone gainer overnight still basking in fresh positivity towards China and metals prices getting a new lease of life – Copper extending its gains and Iron ore having broken out from a 1-month sideways channel.

US equity markets fell across the board on Tuesday as investors reacted to the latest delay for Trump’s Healthcare reform bill, now not expected to be voted on until after the 4 July recess, while large cap Tech stocks took another leg lower. Declines for Amazon, Facebook and Netflix following the EU’s record €2.4bn fine for Alphabet saw the Tech-focused Nasdaq underperform, while the equivalent sectors on the S&P500 and Dow Jones also weighed, offsetting strength in Financials.

Crude Oil prices were rattled overnight by a surprise build in US inventories according to the latest API report. This renews concerns that rising US production will offset OPEC-led production cuts meant to address global oversupply. Brent Crude, however, has recovered from lows after bouncing from resistance turned support at $46 and is now looking to overcome resistance at $46.70 to continue its recovery from 10-month lows of a week ago. US Crude eyes hindrance at $44.20.

Gold has held up above week-long rising lows support as USD weakness derived from ECB President Draghi’s hawkish speech offsets the central message that accommodative policy measures could be lifted in the early part of 2018. However, the precious metal has once again been unable to overcome resistance at $1254, a key level that will be need to be overcome for a return to last week’s $1260 highs and to avoid breaching $1250 rising lows support.

In focus today, after ECB President Draghi’s surprisingly hawkish ‘reflation’ bombshell sent the EUR sharply higher (and DAX lower), will be a policy panel (2.30pm) at the ECB’s forum in Portugal at which he will be joined by peers Carney (BoE), Poloz (BoC) and Kuroda (BoJ).

Furthermore, after Fed Chair Yellen’s steady as she goes message last night, keep an eye on US data which has been conspicuously weak of late with updates on US Wholesale Inventories (1:30pm) – seen expanding once again after plunging in April – and US Pending Home Sales (3pm) – set to have returned to growth in May.

With oil so dominant, US EIA Crude Oil Inventories (3:30pm) will be closely watched after last night’s surprise reported API inventory build to see whether government figures confirm the private sector report. Note despite last night’s read, consensus still looking for a decline in stockpiles.

Tonight, results from the US Fed’s Comprehensive Capital Analysis and Review (CCAR) of US large Banks (9.30pm) will offer extra stress test analysis, tell us whether they have adequate forward-looking capital planning processes and sound risk practices, and if the Fed has signed off on their plans for dividends, buybacks and acquisitions.

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

• Dixons Carphone – “nothing out of the ordinary” in recent trading, says “well positioned” as profit beats forecasts
• UK’s Stagecoach reports 15.3% fall in FY pretax profit, says FY revenue rose 1.8% to £3.941bn
• Construction group Kier sees FY underlying profit in line with expectations
• Petra Diamonds Ltd. says on track to achieve record revenue and production figures in FY 2017
• Meat retailer Crawshaw’s 20 – weeks like – for – like sales down 4.5%
• UK’s Bunzl sees rise in H1 revenue, more acquisitions
• Genel appoints ex-Shell executive as CFO in board reshuffle
• UK house price growth bounces back in June – Nationwide
• Tullow pays down debt, raises profit in first half under new CEO
• Societe Generale sells minority stake in Georgia’s TBC Bank
• London copper slips from near three – month top
• Gold firm as U.S. healthcare vote delay weighs on stocks, dollar
• Oil prices weighed down as U.S. inventory gains revive glut worries.