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

UK 100 called to open -15pts at 6715 after Asian markets put in a weak session overnight, following their US counterparts lower into the end of the month (Dow Jones biggest decline since February) amid continued geopolitical (Russia, Ukraine, Middle East) and sovereign concerns (Argentina, Portugal), some mixed/disappointing economic data and the traditional apprehension ahead of the latest US Non-Farm Payrolls update.

The VIX volatility index has risen 47% in July, its biggest monthly rise since the same month 3 years ago after a 27% jump yesterday as derivatives traders rush for protection against an early Fed rate rise following the FOMC delivery of a slightly more upbeat assessment of the US economy than expected ahead of today’s US jobs report.

Overnight, Asian equities in the red, although not as bloodied as in the West, with a modicum of support emanating from Official Chinese Manufacturing PMI for July beating expectations and improving more than expected thanks to steady domestic demand, although the HSBC final reading for the month was revised lower, but still improved from June.

In the early hours, we also had some positive news out of the Middle East with the announcement of an unconditional 72-hour humanitarian truce in Gaza being agreed by all parties from 6am UK time with both Israeli and Palestinian delegates going straight to Cairo for talks on a more durable solution for the 3-week conflict.

In focus we have European Manufacturing PMIs with expectations for little changes from the flash readings implying slight pullbacks in growth in Spain, Italy and the UK, a continued struggle in France (contraction), improvement in Germany and Eurozone stable.

In the afternoon, all eyes back stateside for the monthly US Unemployment Report with consensus looking for job additions of 231K in July, down from the 288K in June and with an unemployment rate static at 6.1%. As always though, the devil is in the detail and it may be that revisions and/or wages growth take centre stage in terms of what is seen as influencing the Federal Reserve’s timing no that all important first interest rate hike.

The week closes with the US PMI Manufacturing, which is seen bettering its flash reading but down from June while the Uni of Michigan Consumer Confidence is expected to have improved along with the US ISM Manufacturing.

Gold has found some support overnight around the $1280 level but has failed to benefit from any safehaven seeking amid the equity market sell-off. The metal is in fact back to where it was trading 12-months ago and still technically in an uptrend from December 2013.

The price of oil has also slipped after the announcement of the ceasefire in the Middle East with US Light Crude down at a four month low around $98/barrel after a 2% decline yesterday and almost a 7% fall in July itself – the worst monthly performance since May 2012.

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