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

UK 100 Index called to open -35pts at 5885, back below 5900 after the sell-off from Monday’s 2016 reversal peak gained momentum, adding to the longer-term trend of falling highs from May 2015. Note overnight support at 5850, although, this could merely be a stopover amid a full retrace towards 3.5yr lows of 5600 after the breakdown from the 2-week rising channel. Watch levels: Bullish 5930, Bearish 5840.

The negative opening call comes after another down day for US and Asia  (down -2-3%) as the turnaround in Oil extends beyond 10%, eroding investor confidence and reviving market jitters about supply gluts and stockpile growth versus ailing global economic health. S&P’s follow-up action on US Oil & Gas groups also added to energy sector woes as did some hawkish Fed comment. Uncertainty also rising as we near Friday’s US jobs report.

Bearishness is also in spite of improved Chinese and Japanese PMI Services data (China 6-month high, offsetting manufacturing weakness) and the BoJ’s Kuroda suggesting room for more stimulus (more QE, more negative rates), which would normally be drivers for bullish sentiment. Global growth worries dominate with Australian export weakness suggesting reduced trade with a slower growing China, countering a rebound in building approvals down-under.

US bourses also resumed their selloff as another collapse in crude prices and further action from ratings agency S&P hit energy names Exxon Mobil (XOM) (biggest earnings slide in 10 years - although that beat forecasts) and Chevron (CVX). We heard from the Fed’s George who argued that recent volatility didn’t exactly stem from anything new on the drivers front, and that the US economy is in a generally good state - she’s up for a continuation of the tightening cycle.

In focus today will be Eurozone PMI Services, with growth expected across the board although Italy only just above breakeven being in stark contrast with German and UK strength. Ahead of the US jobs report watch out for the ADP Employment change print with expectations for around 200K in January.

Coupled with good reads for US PMI and ISM Services, this could allow the Fed to harp on about jobs market progress and economic recovery despite conspicuously absent inflation, and given strong correlation of equities versus oil, the outcome of US Crude Inventories could dictate market direction.

Corporates-wise, today sees earnings from GlaxoSmithKline (GSK) as well as the continued fallout from yesterday’s  energy sector woes (XOM, BP.) amid re-tanking oil prices. Note Yahoo (YHOO) set to cut 15% of its workforce and explore strategic options.

Brent and US Crude continue their slide this morning amid the ever present massive global supply glut - the spread between the two now a little wider as US dips back below $30 while Brent managing to hold above $32. No significant upside seen (perhaps more downside in fact) as we note S&P placing several energy names (including XOM and BP) on its ‘credit watch negative’ list, indicating a loss of resilience in the major players in that sector after they reported some very concerning earnings figures.

Gold, of course, revelling in all this with the added bonus of negative Japanese rates eroding some of the safe haven competition in the Yen. The USD Basket has almost completely retraced last week’s gains - still strong, but a little less of a hindrance on commodities. Note pressure building on $1130 resistance.

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

• Johnson Matthey Q3 sales down slightly
• AstraZeneca says new lung cancer pill Tagrisso approved by EU

• Gem Diamonds says remains on track for 2015 dividend payment

• Shanks sees FY result slightly below its previous expectations

• Balfour Beatty wins Warwickshire highways maintenance contract

• Foxtons says full – year 2015 earnings will be roughly flat

• Johnston Press announces reduction of pension deficit

• Hargreaves Lansdown bucks volatile markets to set new asset high

• Sky Backs InCrowd With £0.3m Investment