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

"Central Bouncers appease rowdy party poopers"

UK 100 Index called to open +15pts at 6320, poised to continue the gains of late last week after strong European and US closes and advances in Asia overnight with sentiment boosted by investor belief that Central Banks (Fed, BoE, ECB) will avoid tightening too soon and will remain accommodative via more/extended QE and rates lower for longer.

That’s not to say that last week’s other concerns have evaporated. Markets still worried about global growth, another Eurozone crisis, the risks from Ebola, persistent Geopolitical tensions and Q3 results, but after steep equity falls in equities over the last month ($2tn lost in 6 days), and given how cheap money and QE fuelled stocks to new highs over the last few years, for now traders are banking on more of the same and a rebound.

US markets closed higher amid speculation of delayed end to QE with the Fed’s Rosengren saying they need time to process what’s causing market turmoil before changing policy but he would consider more stimulus if inflation fell too far/ economy weakens. We also had solid US Housing and Consumer Confidence data).

This followed the BoE’s Haldane saying delay to rate hike and ECB’s Constancio calling for more expansionary policy and Coeure upbeat on TLTRO uptake and talk of China’s PBOC planning to inject 200bn yuan into banks.

Asian stocks have taken the baton from Wall St with Japan’s Nikkei leading the way thanks to a weaker JPY, a Nikkei weekend report that the Government Pension Fund (GPIF) is to more than double its ratio of domestic stocks to 25% and the BoJ’s Kuroda adding to central bank optimism and traders back to hanging on every CB member’s words reiterating he’ll maintain QE for as long as needed to achieve stable 2% inflation.

Data-wise overnight UK Rightmove House Prices accelerated in October after their September rebound even if the annual rate of increase slowed, while Japanese Business sentiment indices were mixed/stable but stagnant German Producer Prices will no doubt add to the fears of Eurozone deflation and a triple-dip recession for the region’s supposed industrial powerhouse.

In focus today amid a quiet macro-data line-up we have the Eurozone Current Account data followed by US Q3 results from Halliburton before the US markets open and then Texas instruments, Apple and IBM after the US close. This week remember we have China data including GDP/Ind Prod, Retail Sales/Investment tomorrow, US CPI, on Weds, China & European PMI Manuf on Thurs and UK GDP on Friday.

The UK 100 index has made good progress from last week’s lows of sub-6100 and having made it back above 6300 (now support) all eyes are on regaining 6400 (next resistance), the breached 10-month support level which likely added to the capitulation selling pressure. Thereafter we look to 6500.

In commodities, safehaven Gold has fallen back below $1240 amid the equity rebound while Oil is holding up after recovering a little its lost ground on hopes of more central bank stimulus driving a global growth recovery even if the issue of oversupply is still the elephant in the room.

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