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

UK 100 Index called to open -55pts at 5615, after support at 5650 gave way around the US close and index futures made an overnight revisit of Wednesday’s 5590 lows to maintain February’s trend of falling highs, even accelerate it. Bulls hopeful of another more meaningful bounce and turnaround from 5600 while bears are itching for a breakdown to fresh 3.5yr lows. Watch levels: Bullish 5650, Bearish 5590.

The negative opening call comes after a late sell-off and thus down day for US stocks, in stark contrast to the rebound in Europe, and after Hong Kong’s Hang Seng plunged on its return from Chinese New Year holidays. Weakness stems from Fed Chair Janet Yellen warning on current financial market turbulence and suggesting further rate hikes could be delayed, which added to already raised anxiety about the health of the global economy to hold back risk sentiment.

Gold tested 9-month highs and USD/JPY fresh 15-month lows which signals a rise in safehaven seeking, bolstered by disappointing updates from a host of corporates (see below), and US Crude Oil breaking down to trade $27/barrel. Japan’s Nikkei closed for public holiday, while Chinese bourses remain closed until next Monday (thankfully).

US markets experienced a late sell-off, no doubt hastened by Fed chair Janet Yellen’s comments which strayed into ‘fraught’ financial crisis territory, talking of the possibility of negative interest rates should the need arise. Note that this is extremely unlikely for numerous reasons, some legal and some practical, but the fact that it was mentioned probably served to add a little spice to market action late in the day. If she knows the power of words, perhaps she may choose hers more carefully in future. The market is a sensitive being.

Unfortunately, we’ve not quite as much freedom with words when talking corporate results - the most benign available being ‘disappointing.’ Ashmore, Pernod Ricard, Nokia, Rio Tinto (divi scrapped), Twitter, Zurich Insurance and SocGen (oh, the banks…!) all taking earnings hits and warning of tough times ahead.

In focus today, will likely be the Swedish Riskbank policy decision, with expectations for already negative rates to go even further south to encourage banks to stop hoarding and get money out into the system to boost economic growth. This will only add to divergence between the ‘negative club’ (ECB, SNB, BoJ) and the US Fed which dared deliver a landmark post-crisis (or could it be pre-crisis?) rate rise in December, and acknowledges current market conditions could hamper future hikes and thus prior guidance, although policy on no pre-set course.

Markets may like cheap money for longer but they definitely don’t like the idea of a major market turn-down and another recession, hence discussion about need for US negative rates sapping risk appetite overnight. Note Janet Yellen testifying again today, although yesterday likely saw the most important information already discussed.

Brent crude is holding above $30 this morning while US cousin WTI has fallen decisively below - currently taking a break just above $27 on a spot of short covering, with the 5-day downtrend steepening overnight. A very good day might see a re-visit of falling highs about a dollar higher than current levels for the US marker, while Brent looks tightly range-bound. Note the spread between the two having widened.

Gold has popped back up above $1200 after the USD weakened, as highlighted yesterday, following Yellen’s update on monetary policy. Dollar pullback also helped by a strengthening Japanese Yen, whose negative interest rates are proving unusually attractive to another tranche of safe haven seekers. The metal’s reversal continues.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

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

• Informa says FY pretax profit £219.7mn
• Johnston Press confirms in talks to buy newspaper i
• Henderson says retail clients drove record FY net inflows
• Pennon Group says on track to meet its expectations for 2015 – 2016
• Halma sees FY adjusted pretax profit in line with market expectations
• Workspace announces sale of five industrial buildings
• Shell says cancelled £10.07bn bridge facility in full
• Dairy Crest sees proceeds from sale of dairies ops around lower end of guidance
• Tobacco group Imperial Brands increases revenue despite sales volume fall
• Thomas Cook sticks to guidance after Q1 improvement
• Glencore posts 5.7% fall in Q4 copper output
• Tate & Lyle says FY outlook remains unchanged