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

UK 100 Index called to open +30pts at 6435, with futures having broken above 6400 thanks to a positive finish in Europe and a decent US rally supported by continued robust US Q3 earnings reports (80% beat profit expectations; 61% beat sales forecasts) and US consumer Confidence hitting a 7yr high on lower gasoline prices and an improved jobs market.

While markets had paused a little ahead of the Fed’s latest monetary policy decision, the US Consumer Confidence and Richmond Fed jumps higher, offsetting weaker US Durable Goods and S&P Housing, helped US markets close with decent gains (DJIA >17000 after 1150pts/7.2% rally in 10 sessions).

After the US close, Facebook Q3 results beat analyst expectations with profits +90% on growing strength in mobile advertising, but shares fell 11% in after-hours trading with the CFO saying the network faces a “more difficult comparison” in the current quarter while IBM approved a higher stock repurchase program.

In Asia overnight, sentiment buoyed by positive sessions in Europe and the US along with a bigger than expected rebound in Japanese Industrial Production (highest since Jan, shaking off higher sales tax) and still weak JPY helping exporters. Hong Kong positive on approval of trading link with Shanghai, but Australia in the red likely on deterioration in the China Westpac-MNI Consumer Sentiment and the China Leading Index.

This morning note Deutsche Bank reporting a loss of €94m in Q3 compared to expectations of a €92m profit, on revenues of €7.9bn. This follows the bank pre-announcing that it would book €894m in litigation reserves, while UK retailer Next has cut guidance due to unusually warm weather.

The ECB remains very vocal with Noyer saying the central bank does not expect deflation but notes the risk, while WSJ’s Fed watcher Hilsenrath expects the FOMC to end QE3 today while avoiding loud signals about the outlook for interest rates. The EU Commission also says its sees no countries failing to comply with EU budgetary obligations echoing a WSJ article reporting budgets are no longer 'egregiously’ off target after Paris, Rome pledged new cuts.

BoE’s Cunliffe says due to softening pay and inflation, evidence of slowing UK growth and deteriorating prospects for global economy the need to raise UK rates has receded so the bank can remain accommodative for longer. After the European bank stress tests note the BoE saying it will impose tougher leverage ratios on UK banks in order to reassure investors that lenders can weather the next a crisis.

Note the World Bank saying an ambitious 2015 GDP growth target for China will hold back reforms and noted setting a hard GDP growth target in China will only undermine the country’s reforms. However, the World Bank added a 7% GDP growth target for China is enough to support the labour market.

Now the UK Index is above 6400 we look for the level to revert to support for any pull-back. The chance of a bullish Inverse Head & Shoulders reversal being delivered remains good (neckline 6400; target 6730). Watch levels: bullish 6450, bearish 6400.

In focus today we have UK Consumer Credit and Mortgage Approvals which could provide the latest signals on the UK housing market and consumer confidence. While the main-event of the day will be the Fed’s update on monetary policy and whether the end of the QE3 taper is nigh.

In commodities, Gold is hanging around the $1230 level, off its highs and lows, as investors await the Fed update and weigh up physical demand against the need for a safehaven while equities rally.

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