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

UK 100 called to open +5pts at 6840, with futures continuing to recover from the test of 6800 on Friday ahead of the long US/UK weekend. The index is now testing highs of early last Thursday, having broken above the trendline of falling highs from 15 May, which could allow for a recovery back to recent 6900 highs. Watch out again for the 6850 zone acting as a hurdle.

Overnight, Asian bourses mixed with activity light due to UK/US holidays but optimism of continued policy intervention to support global economic growth helping raw materials names. Japan’s Nikkei at a seven week high helped by Corporate Service Prices accelerating more than expected in May, rising for the 12th month in a row, and Small Business Confidence making gains.

Australia showing gains thanks to ‘sources’ at China’s PBOC saying economic data could rebound in March meaning any policy stance not need to include RRR cuts (Reserve Requirement Rate; what banks must hold) to stimulate growth anytime soon, although Hong Kong in the red dented by property sector fears.

In Europe, the ECB President Draghi signalled yesterday a readiness to act on low inflation, which could be warming us up for June intervention and helped risk appetite yesterday. Note Euro-sceptic party success in European elections which could urge an austerity rethink, and a lessening of diplomatic tensions but continued on-the-ground fighting in between Ukrainian and pro-Russian troops after the Presidential election.

In focus today we have UK BBA Home Loans seen cooling a touch in Apr and will be watched carefully given the sensitivity to what continues to be a low-rate and stimulus heated UK property market.

Later in the day it’s all about the US with Durable Goods Orders expected to fall back in April (headline and ex-transport) while Housing Prices remain buoyant in March via the FFHA and S&P/Case-Shiller. Both elements could fuel expectations that the US Fed takes its time withdrawing its current QE3 stimulus.

US PMI Services is expected to give up a little ground while still growing well above 50. Consensus expected US Consumer Confidence to edge up in May, however, like the Chicago Fed last week (and at odds with Kansas), the Richmond and Dallas Fed Manufacturing Activity Indices are seen  falling back.

On the corporate front note Pfizer (PFE) walking away from its bid for AstraZeneca (AZN) without a counter-offer, letting the 28-day UK Takeover Code offer deadline expire. It cannot make another approach 6 months, unless invited to do so by AZN. Note Saga (SAGA) struggling to deliver the market debut some had been expecting on Friday with shares closing at the official IPO after only a brief foray higher, despite been priced at the bottom end of the 185-245p range to ensure a successful launch.

Gold trades down near its recent lows of $1285 (little changed this month; consolidation mode) as investors assess whether the election of Ukraine’s president will ease tensions with Russia and the Euro weakened against the dollar, reducing the appeal of the commodity. Copper ($6937) remains bid helped by last week’s optimism on China growth/recovery.

WTI at $104.4/bl trades near a 4-week high ahead of a US data deluge this afternoon while is Brent is steady around $110.6 helped by last week’s China data and uncertainty surrounding Ukraine and fuel supplies to Europe.

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