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

UK 100 Index called to open +5pts at 5870 after an overnight flirt with 5900 saw the 4-day rebound extend to an impressive 400pts and 7.3%. This took the index a step higher from its recent consolidation around 5850 and puts it firmly in the upper half of a longer-term 4-month falling channel, with upside potential to descending highs at 6000 with 1-month intersecting support at 5820. Watch levels: Bullish 5890, Bearish 5850.

The flattish opening call comes after a largely down session in Asia and despite gains for US bourses (1-2%) on their return from holiday. The negativity in Asia stems from weakness in oil overnight linked to USD strength after China’s central bank (PBOC) fixed its Yuan currency at its lowest in a month and hopes of a coordinated cut to oil production waned without Iran onboard.

Japan’s Nikkei suffering from a stronger JPY despite overnight USD strength, with the USD/JPY rate holding its trend of falling highs since the end-Jan Bank of Japan (BoJ) introduction of negative interest rates. Energy/Mining names in the region suffering from renewed oil price weakness, taking the shine of recent bullishness, although we note the Aussie ASX is posting smaller losses than peers while Chinese stocks are positive.

Wall Street closed in the green, with gains led by the financial, consumer and tech sectors. Note also energy stocks buoyed by essentially empty promises of worldwide crude oil production freezes, even as the oil price itself declined.

Fed chat was also on the wires with the outspoken new kid on the block, Kashkari, saying he felt that banks are still ‘too big to fail’ and would be at home to breaking them up. Whether or not his point is valid, one wonders how long he’ll be around with such Trumpesque rhetoric, though his comments about negative rates (ok to consider, v. unlikely to be used) did fall more in line with colleagues.

Elsewhere, Harker said it might be a good idea to shift the focus from employment (that seems to be ok) to inflation (still lacklustre given oil’s woes) when considering any future policy action. Those comments echoed by Bullard who felt the Fed needs to stop pussy footing around the inflation issue - the statement “the Committee would be concerned if inflation were running persistently above or below this objective” seen by him to now be a little backward-looking.

US markets were apparently less than worried about a tanking US Empire manufacturing print which was balanced by a positive employment index. Note also the NAHB housing market index missed but remains comfortably above the 50 watershed.

In focus today will be UK Unemployment data although the wages growth figures may garner more attention given the implications for inflation. Thereafter US Housing Starts are seen largely unchanged, while US Producer Prices are seen remaining under pressure, even if US Industrial and Manufacturing Production are seen rebounding.

In the evening, however, it’ll all be about the Fed minutes and the spectrum of views among the FOMC about rate rise trajectory, the state of the US economy and  the impact of financial market turbulence with a potential knock-on for the USD and thus the commodities space. We aalso have the Fed’s Bullard speaking ovenright.

Interesting to note that the only thing to react in a sensible way to yet more chatter about unlikely oil production freezes has been the oil price itself! After weakness in crude overnight, note both Brent and WTI are exhibiting what could be the formation of bearish flag patterns as a sense of realism returns to the market.

Gold is currently range bound just above $1200 with shallow rising support, neither hindered nor assisted by the USD but supported by a good Asian session overnight. Current break in the strong uptrend can likely be attributed to profit taking following a sterling YTD performance by the yellow metal. Note the 6000 level on the UK 100 , a retracement from which could weigh on recent risk appetite (if the index makes it there).

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

• Euronext's core profit jumps on strong listings, cash trading
• ABN Amro on track to meet financial targets
• Glencore says early refinancing of revolving credit facility
• Ageas Q4 results hit by Britain floods
• AstraZeneca Cancer Drug Gets FDA Breakthrough Therapy Designation
• Auto Trader FY Results To Marginally Beat Expectations