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

UK 100 called to open -10pts at 6825, after US stocks closed broadly lower (tech hurt again), erasing earlier gains following better US jobless claims data and more dovish rhetoric from ECB President Draghi (ready to act next month; QE?) and Fed Chair Yellen’s testimony (reiterated rates unlikely to rise until economic recovery strong) as Russia confirmed it will respond to latest sanctions.

Overnight, stocks in Asia mixed with Japan positive for a second day despite mixed sentiment survey readings while Chinese shares have retreated following inflation data coming in below expectations (CPI at 18-month low; PPI still in decline).

Aussie stocks have pared losses, however, on hopes that weak China data will fuel hopes of stimulus which may spill over into European trading given the importance of sentiment towards growth in the world’s #2 economy and after the recent conflicting trade balance and PMI readings.

In Europe, ratings agency S&P has upgraded its outlook on Portugal to stable from negative while affirming its BB rating. On the corporate front, note Saga Group giving an indicative pricing range for its IPO of 185-245p/share, implying a market cap of £2.0-2.5bn, making it a significant addition the UK’s recent IPO flow. Conditional trading expected to start Fri May 23.

In focus today we have the UK Trade Balance which is seen largely unchanged in March, but big difference could see GBP move. UK Industrial and Manufacturing production growth seen softer in March although construction output is expected to have rebound.

In the afternoon, US Wholesale Inventories are seen showing stable growth in March while the UK NIESR GDP Estimate will be of interest after it raised its FY 2014 estimate to 2.9% from 2.5% in Feb and ups 2015 growth to 2.4%.

6840 served as resistance as expected yesterday, however, we wonder whether the hopes of Chinese stimulus will allow the index to be dragged higher given we are at the end of the trading week and with geopolitical risk very much on the table. Support still valid at 6780.

In commodities, Gold remains around the $1290/oz level as equities continue to eking out gains, curbing demand for safehaven precious metals even while the situation between Russia and the Ukraine remains tenuous to say the least. The end of US QE3 by the Fed being in sight also not helping.

US Light Crude is headed for its first weekly gain since April as stockpiles shrunk in the US. It is holding around  $100.6/bl having bounced from $99. Brent Crude at $108 highs last seen earlier in the week, based on a heating of the Ukraine/Russian geopolitics increasing the prospect of supply disruptions.

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