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

UK 100 Index called to open +10pts at 6120 with support at 6070 yesterday keeping the uptrend from end-August alive and an 6170 upside test highlighting bullish appetite. Could a bounce deliver us to the 6270 ceiling of a bullish ascending triangle? Will a breakout take us back to June falling highs at 6650? Updated watch levels: Bullish 6180, Bearish 6050.

The positive opening call comes on the back of a constructive Asian session with stocks recovering some of Monday's losses (Japan still closed) lead by consumer and materials. This despite still conflicting signals from Fed members and US data, a continued recovery by the USD from post Fed-decision lows knocking commodities and growing concerns about global and emerging markets growth (China, India) after the Asian Development Bank cut forecasts.

Note China shares up for the third day on the trot, a running streak unseen for a month thanks to optimism surrounding President Xi’s state visit to the US. There is also cautious optimism ahead of China Factory data tomorrow following an improved reading for the Chinese Conference Board Leading Economic index and press talk of slowing growth being overestimated. 

Note Chinese brokerages rallying on the prospect of a London-Shanghai exchange link, which would surely be a positive for the former but a negative for the recently launched Hong Kong-Shanghai link although the Hang Seng index is showing no signs of weakness as the regional outperformer overnight. Australia’s ASX benefiting from a weaker AUD/USD as the greenback strengthens post the Fed and despite a mixed session for miners downunder overnight.

US stocks closed in the green after Hillary Clinton announced her intent to unveil plans to fight the high cost of prescription drugs (by private email, presumably). No doubt Trump will have something wise and educated to say about that. Meanwhile, the fixed income markets received a boost from the Fed’s Lockhart as the phrase ‘later this year’ remained operative in his view, although inflation still a concern. Quite where said inflation is going to come from remains a mystery, however.

After the Fed, focus back on Syriza and Syria with Tspiras back in power in Greece (time to play ball with bailout?) while Russia and Iran worryingly step up their assistance to the Assad regime at the same time as NATO calls for a Russian withdrawal from East Ukraine. Just when you thought things had calmed....

In M&A, note press speculation of a 1500p bid for Smith & Nephew with Johnson & Johnson (JNJ) mooted, which goes someway to offset the Zurich-RSA abandonment yesterday.

In focus today we have UK CBI trends seen improving but only slightly, along with US House Prices and the Richmond Fed Manufacturing Index, however, Eurozone Consumer Confidence is seen remaining as depressed as last month.

Crude prices rallied on Monday with US stockpiles seeing considerable outflows over the past few weeks, indicating solid demand. Both Brent ($48) and US Light Crude ($46) suffering from technicals this morning, however, with falling highs since 17 Sept putting pressure on prices.

Gold ($1133) losing its shine again after Asian equities and the USD went higher overnight and US Fed commentary continued to place markets on rate hike alert. Low US inflation combined with potentially higher interest rates making for a more attractive and less volatile option in US treasuries for safe haven seekers.

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

• Russia's Polymetal agrees to settle Kyzyl put option
• Dairy Crest says FY outlook remains unchanged
• IG Group Q1 revenue +24%
• AG Barr underlying H1 profit +3.3%
• Acacia Mining forms JV with OreCorp to progress Nyanzaga project
• Close Brothers FY adjusted operating profit +16%
• PZ Cussons says trading remains in line with expectations
• Pub firm M&B ditches CEO, warns on profits
• Hochschild Mining gets final mill operating permit for Inmaculada mine
• Meggitt agrees to buy U.S. aerospace component firm for $340mn
• Sirius Minerals says has received prequalification status from Infrastructure UK
• Silence Therapeutics CEO Mortazavi resumes duties post leave
• Card Factory H1 underlying pretax profit +72%
• Motoring group AA sees H1 revenue & earnings drop