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

UK 100 Index called to open +70pts at 6000, back testing the recent bugbear level of resistance which has hindered second wind to January recovery. Potential for recent pause 5900-6000 to serve as consolidation, digesting 400pt rally from recent 3.5yr lows, before a breakout towards 6200/6300 via complex bullish inverse Head & Shoulders reversal. Bullish 6035, Bearish 5965.

The positive opening call comes thanks to the Bank of Japan making a surprise jump on to the negative interest rate bandwagon, despite recently denying the possibility, in an attempt to spur banks to lend more to boost the weak economy and encourage inflation. Adding to expectations of a less hawkish Fed, market sentiment supported by hopes of more global stimulus and lower rates for longer.

Stocks in Asia at two week highs with a weaker Yen helping Japan’s Nikkei put on almost 3%, but not without wild swings, as exporters get a boost from the weaker currency. Chinese equities on a charge for first time in 4 days, paring worst monthly rout in 7 years as PBOC injected more liquidity ahead of holidays and investors considered January sell-off overdone. Progress in terms of oil rebound also helping even if Russia’s suggestion of a global output cut meeting has been refuted by OPEC.

Wall Street posted gains yesterday on intraday oil price strength and net positive earnings reports. Amazon shares -15% after it disappointed in what seems to be a trend of ‘over-promise, under-deliver’ for market behemoths thus far, while Microsoft bucked the trend and beat expectations with its forward guidance and deferred revenue (sales booked but not recorded) of $25bn particularly pleasing to the market. Amgen and Visa also impressed.

In focus today we have Eurozone Consumer Price Inflation seen improving in January on an annual headline basis, but stable and still sub-target in core terms. Deflationary pressures still strong. In the afternoon, watch for a slowdown in US Q4 GDP which will add to belief the Fed hiked too early and must hold off from further hikes until data improves.

To close the week, US Chicago PMI seen advancing but Uni of Michigan Consumer Confidence unchanged. The US results line-up remains charged, with updates from American Airlines, Chevron, Colgate Palmolive, Honeywell, MasterCard, Tyco, Whirlpool and Xerox on the cards . Will they appease or displease after mixed batch of reports thus far from major corporates.

Both Brent and WTI are off yesterday’s spike highs yet remain supported nicely around $34. That volatility was of course down to Russian energy minister Novak suggesting that OPEC and non-OPEC were up for meeting to discuss output cuts. However, we’ve since seen a volley of denials from within OPEC, specifically regarding Novak’s comments about Saudi Arabia proposing an across-the-board 5% cut in production. Chances of a deal there are slim at best, but we’ve seen the power of mere words recently.

Gold is spilling over the edge of its 3-month saucer recovery pattern this morning given equity market strength on the back of the oil price (we’re saved!!), but perhaps most significantly USD strength after the BoJ move to negative rates (new customers only, mind!). With gold still more sideways than down trending, keep an eye out for those OPEC/non-OPEC discussions to be, like, non-existent, ramping up safe haven demand once again.

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

• Tullett Prebon says profit margin seen higher than earlier expected
• Tullett Prebon Benefits From Increased Activity Amid Oil Slide
• London copper poised for second weekly gain on China demand hopes
• British Land says Leadenhall building now 94% let or under offer
• Fairfax says deadline for APR deal extended till Feb. 12
• Vedanta says Q3 Copper Zambia mined metal at 32,000 tonne
• Sky Appoints James Murdoch as Chairman
• John Lewis weekly dept store sales +7.1%
• Acacia Mining Contractor Fatality at North Mara
• Oxford Biomedica Initiation of Second CART Programme for Novartis
• Rank Group Posts Fiscal Half Year Earnings Growth; Trading in Line