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

UK 100 called to open +30pts at 6705 helped by US markets closing the week off their worst levels as sovereign concerns related to Argentina and Portugal were countered by a mixed batch of US macro data (notably jobs) which itself went some way to tempering recently heightened fears of an early US rate rise.

Asia stocks are mixed, with traders cautious after the US data reports and given Portugal debt concerns, with Australia’s ASX in the red after data from its biggest export market China, showed July Non-Manufacturing PMI dropping back to 54.2 from 55.0; still growing and recovering, just not quite as quickly. Worries reinforced by New Zealand’s Commodity Price Index showing a much sharper decline in July.

Over the weekend, the Bank of Portugal announced a €4.9bn bailout of Banco Espirito Santo. It’s déjà vu, all over again in Europe, although the sanguine market reaction so far would suggest an isolated event. After failing on Friday, Israel declared another humanitarian ceasefire today having already thinned its military strength along the Gaza strip.

Note Moody’s upgrading Greece’s government bond rating by two notches (still speculative, and one notch below high risk) citing significant fiscal improvement over the past year. The ISDA (International Swaps and Derivatives Association) ruled Friday that sellers of CDS (credit default swaps) tied to Argentine sovereign debt must pay buyers, judging the nation's failure to pay bondholders Wednesday a "credit event."

On the topic of a US rate rise, comments from the Fed hawk’s Fisher and Plosser had the former saying it's quite possible the Fed will raise rates early in 2015 while the latter argued that forward guidance language is no longer needed.

In focus today we have UK Construction PMI seen giving up a bit of ground in July, although still growing strongly. Eurozone Sentix Investor Confidence is expected to have fallen back for August, while consensus puts Producer Prices for the region unchanged in June after deflation in May. HSBC is the last of the UK banks to report Q2 results

Gold has fallen back below $1300 after its rebound from $1250, as hedge funds reduce their bets (net longs down 10% according to US government data) that the yellow metal will rally from its longest retreat in a year as US growth beats estimates raising concerns of higher borrowing costs. This all despite geopolitical risk aplenty. It does, however, remain in an uptrend from December 2013 lows of $1200, with support around $1270.

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