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

UK 100 Index called to open +15pts at 6695, making a recovery from its test of 6640 where it found support from rising lows dating back to 12 Nov. Good news for those still eyeing September highs 6900. This acceleration in the recent sell-off from 6730 highs, however, was the first hint that the bearish rising wedge pattern could breakdown, and we are mindful that any bad news and risk-off/caution into the week-end could easily revive this. Watch levels: Bullish 6735 and Bearish 6630.

Positive opening call derived from strong US data yesterday, dovish comments from the ECB President and, following its record breaking $25bn IPO, a highly successful $8bn debut bond sale by e-commerce giant Alibaba (received orders for $57bn, paid lower interest rate) as well as some buying on the dips, making the most of weakness following gains of over 10% for the UK 100 and 14% for the DAX30 since mid-October lows.

US equities closed marginally higher (more record highs) following strong domestic data (Philly Fed highest since Dec 1993, Existing Home Sales best since Sept 2013, US Leading Indicator) which served to offset concerns about growth in the Eurozone following weak PMI Manufacturing & Services (and even a weak US PMI Manufacturing; 10-month low) bringing stateside equities and global futures back from their lows.

Sentiment helped also (although too late for European equities which closed lower even after a stellar recovery) by ECB President Draghi saying the region’s central bank stands ready to defend the €uro and the Fed’s Williams overnight saying unconventional monetary policy is important in supporting US economy; encouraging signs some cyclical weakness in labour market participation is diminishing.

Asian equities again mixed with Japan’s Nikkei higher after USD/JPY recovered from lows following Finance Minister Aso saying the speed of the recent JPY weakening has been too fast suggesting a hint of official concern and Economy Minister Amari refusing to say whether JPY was under or overvalued. PM Abe has dissolved lower parliament for snap elections next month, hoping to win support for his existing reforms.

In focus today, we have ECB President Draghi speaking again after the European open. UK Public Finances are seen improving in October. Canadian Consumer Price Inflation is expected to show weakness in October (although Core rate stable). After the huge jump higher by the Philly Fed yesterday, Kansas City Fed will be much watched, forecast to deliver an up-tick in November.

In commodities, Gold maintains its upward run from early November lows (longest stretch of weekly gains since July), holding around $1190 despite USD strength, and looking like it wants to better the $1200 level it tested recently. This while investors weigh up signs of increased physical demand and speed of US monetary policy normalisation.

Oil prices remain confused ahead of what is billed as a highly contentious OPEC meeting next week. Crude rebounded to $76.0/barrel after strong US data, and Brent Crude $79/barrel following suit from recent lows. However, much uncertainty about what will be decided about the cartel’s production levels while demand eases globally and supply rises. Note a UK Daily Telegraph article suggesting Iran has offered to double oil exports if nuclear sanctions that restrict its energy industry are removed by Western powers. More supply for waning global demand?

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Ophir Energy offers to buy Salamander in all – stock deal
• Ophir Energy says considering remaining prospects in Tanzania block
• Xcite Energy posts quarterly loss of 2.7 million stg
• Rolls – Royce wins $5 bln order from Delta
• Pub operator Fuller's first-half profit rises 8 pct
• Stobart Group announces financial close to 110 mln stg project
• Hornby says sees full-year meeting expectations