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

UK 100 Index called to open flat at 6085 having broken below 6115 yesterday and the level turning to resistance after an overnight test. The breakdown doesn’t quite kill off the uptrend from Aug 25 but certainly puts it in jeopardy whilst maintaining the downtrend from 6300 highs last week. Watch levels: Bullish 6150, Bearish 6040.

The tepid opening call is despite another largely negative session in Asia with stocks in retreat on account of renewed volatility in Chinese equities reinforcing downside risks (something the RBA minutes warned about) and the BoJ maintaining its highly accommodative stance.

Japan’s Nikkei is the only major index in positive territory with exporters helped by USD/JPY weakness after the BoJ stood pat, re-emphasising the stark contrast in global central bank policy and economic growth prospects of major nations ahead of the Fed’s Thursday ‘stick or twist’ policy decision.

Australia in the red, following China lower given their strong links and despite a weaker AUD after the RBA minutes and what should be a largely positive leadership change, however weekly consumer confidence did fall to its lowest since the global financial crisis as weak commodities and China jitters take their toll, and new motor vehicle sales fall again in August.

US equities closed in the red after The NY Fed published a report showing US inflation expectations falling over the short- and medium-term. While low expectations should buoy markets obsessed with a potentially miniscule interest rate rise on Thursday, the fact that year-ahead expectations remained above the 2% target accentuated already present global market jitters sparked in part by Nobel Laureate Robert Schiller talking of toppy looking US stocks and Greek party leaders being unwilling to work together if no-one wins the election outright, which looks like the most probable outcome.

In focus today we have UK Consumer Inflation which is forecast to show a rebound in August from a negative July print. Nonetheless, the key core reading is seen slowing while the situation for Producer Prices is expected to have remained highly deflationary, understandable given the sharp decline in commodities prices and China slowdown fears. German ZEW surveys are seen a little negative in terms of expectations, falling in September. In the afternoon, US Retail Sales are forecast to show slower growth in August and no improvement for the Empire State Manufacturing Index, while Industrial Production is seen contracting and Business Inventories pretty much flat.

Crude prices flat-to-positive this morning after both WTI ($44) and Brent Crude ($47) posted big losses Monday despite a smug OPEC statement saying US production is ‘surrendering to the master’ which should have alluded to an easing of the supply glut, but was instead ignored as traders preferred the hard data which showed US inventories bulging at the waistline. API data due out later today as a prelude to more closely watched EIA weekly inventories on Wednesday.

Gold ($1108) steady around 4-week lows with a light but even dusting of buyers and sellers. Many investors remaining on the side-lines to observe movements in the USD ahead of Thursday’s US FOMC meeting, at which they probably won’t raise interest rates.

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

• London Stock Exchange confirms sale of Proquote to IRESS
• Silex Systems says unit signs license and assignment agreement with IQE plc
• ARM says trading in line with outlook given at Q2 results
• IQE says remains confident of achieving FY expectations
• Old Mutual Chief Operating Officer to leave group
• Kingfisher set to open another 200 Screwfix stores
• Aberdeen Asset Management Buys Advance Emerging Capital Ltd
• Rockhopper Exploration Swings to Net Profit on Tax Credit
• Nostrum Oil & Gas Unable to Agree Deal with Tethys; Offer Still on Table
• Online Grocer Ocado Posts 17.3% Rise in 3Q Sales