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

UK 100 Index called to open -5pts at 6565, although its maintains its uptrend recovery from Mid-October lows of 6070, having made a test of 6600 on Friday and support kicking in around late October highs 6550. The prospect of further gains holds, but after such gains (8.7%), we acknowledge the potential for a breather and some profit taking. Our watch levels move to a bullish 6610, bearish 6550.

This follows a flat US close on the back of mixed US Jobs report, some dovish Fed commentary, escalating tensions in Ukraine, US president Obama authorising the deployment of 1500 non-combat personnel to Iraq and mixed Chinese trade data over the weekend which could muddy the waters over calls for stimulus.

Asian markets mixed with Australia and Japan in the red, capping  three weeks of gains for the latter, as the USD pulled back following the US Jobs report and China trade data, allowing the JPY and AUD to come off their highs, while Aussie Home Loans fell further and more than expected in September, in-line with weaker consumer confidence.

Equities in Hong Kong and China higher on weaker USD (and excitement about the trade link going live from next Monday giving foreign investors access to a $4.2tn equity market) after the PBOC raised the yuan reference rate by the most since Jun 2010 while the currency rose after what was considered stronger headline trade data. Note China and South Korea also agreed a bilateral free-trade deal while China and Japan’s leaders are having their face to face discussions in 2 years, potentially thawing a difficult relationship.

While the Chinese Trade surplus jumped more than expected, this came via exports not slowing as much as expected but imports slowing more, and inflation data highlighting a worrying worsening in Producer Prices deflation and Consumer Prices holding stable at a five year low.

On the ratings front, S&P affirmed Portugal at BB stable while DBRS cut the outlook on France to negative from Stable. In Spain, the Catalans voted on Independence in a non-binding ballot ruled illegal by Spain with more than 80% in favour of secession and a strong turnout.

Central Bank-wise, the Fed’s Kocherlakota said he expected low rate policy for several, maybe many years to come, while the ECB’s Coeure said it will try other measures if current instruments do not work on inflation.

In focus today, we have the Lloyds Employment Confidence and Sentix Investor Confidence dominating the morning’s agenda with the Fed Labour market Conditions in the afternoon.

In commodities, Gold has bounced almost as far as $1180 thanks to weaker US jobs data seeing the USD strengthening reverse a bit and some bargain hunting following the sell-off from $1250 highs in mid-October. Nonetheless, reports are that Gold bulls are retreating on mass as prices tumble to the lowest since 2010.

Oil also benefited a bit from weaker USD but still hampered by US vs OPEC supply issues US Light Crude trades $78.8 while Brent Crude remains around $83.6 both close to recent highs.

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