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

UK 100 Index called to open -15pts at 6695, with signs of early weakness following an overnight sideways shift around yesterday’s close 6710. The lack of progress and test of 6700 adds more weight to the probability of 1 Apr lows 6670 being revisited, equating to a full retrace of the early April rally, before any signs of a rebound towards 7000. Revised watch levels: Bullish 6725, Bearish 6690.

The negative opening call extends the recent trend with Greece teetering on the edge of default as both Tsipras & Co. and their Eurogroup creditors stand firm in bailout negotiations.  Greek exit from the Eurozone becoming an ever more probable outcome while US Fed rate hike speculation ahead of tomorrow’s FOMC meeting keeping global markets more or less flat into Tuesday’s open with Investors taking flight for the relative safety of the Swiss Franc over tanking European equities.

UK banks could be a focus for investors today after it emerged that the UK is set to gain exemption from EU laws aimed at reducing the ‘too big to fail’ factor by forcing institutions to rein in trading risks.

US bourses had moderate losses on Monday as the USD strengthened against the Yen making treasuries (which did well..) more attractive amid continuing Eurozone woes and some poor macro data (empire manufacturing, industrial production disappointed).

In focus today we have UK CPI at 0930 looking for an improvement on the year while the German ZEW survey at 1000 is seen to contract. US housing starts  and building permits later in the day are forecast to slow for the month of May. See the live macro-calendar for a full rundown.

Asian equities weak, following negative European and US sessions, with caution in the run-up to tomorrow’s Fed meeting where Chair Yellen is seen making it even clear that a rate hike is not far off (September?). We still expect mixed data to provide wiggle room for a delay until early next year, but fully anticipate market expectations (key for trading) to build, keeping USD strong and hindering commodities-linked securities.

Chinese stocks leading Asia lower ahead of tomorrow’s Fed policy update with the Greek debt crisis (both sides standing firm) remaining at the forefront of investor worries (discussion of Greek default options, capital controls) and weakness in response to concerns about the current China equity market bubble, fuelled by stimulus and retail margin trading. Small stocks wearing 2 day losses of >7%.

Japan’s Nikkei in the red despite a weak JPY following comments from BoJ Governor Kuroda that he did not intend to influence (strengthen) the exchange rate last week. Australia’s ASX flat after RBA minutes were slightly dovish but once again without explicit guidance on whether it remained in policy easing mode. Data-wise Aussie consumer confidence rose but Vehicle Sales stayed weak.

Gold’s has rebounded from its test of recent lows $1175 to test recent highs $1190. Note volatility has increased ahead of the Fed meeting and while Greek negotiations (if they can be considered that) drag on. Watch for $1180 becoming supportive and for further gains towards $1200, but beware resistance from 50-day moving average at $1195.

Crude prices still within shallow and wide rising channels, and lower this morning after the latest Platts survey indicated OPEC production totalling 31.11mn barrels per day in May, an increase of 180K BPD on April and the highest since Oct 2012.

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

• Astrazeneca names Pam Cheng as Executive VP, Operations and IT
• Petroceltic sells Romanian unit to GVC Investment
• Dignity to buy 36 funeral locations from Laurel Funerals
• APR Energy Issues profits warning, says COO Brian Rich to step down
• Kier wins new construction contracts worth £247m
• Premier Inn and Costa Coffee demand sends Whitbread sales up
• Ashtead confident on outlook after record profit
• Petrobras cuts delayed until July and Govt oil-policy plan –sources
• Britain to review Royal Mail regulation after rival exits market
• UK's 'bad bank' repays further $5.8bn to taxpayers
• Consort Medical says confident after pretax profit rise
• Petroceltic exits Romania, sells unit to GVC Investment
• Crest Nicholson Ups Growth Target as 1H Profit Gains
• Mosman Oil Plans to Drill on Murchison Permit PEP 57068 on Track