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

UK 100 Index called to open -5pts at 6025 (ex-div impact -25pts) having paused overnight around the ceiling of a 3-month falling channel just above 6000 while it decides whether to push further north and deliver a breakout, or begin to retrace the 530pt/9.7% rally that investors have benefited from over just the last 5 sessions. A breakout would suggest the uptrend has legs, but we point to possibly even more major resistance at 6150 via the trend of falling highs dating all the way back to May 2015. Watch levels: Bullish 6050, Bearish 5990.

The slightly negative opening call comes as ex-dividends for AstraZeneca, Carnival, GlaxoSmithKline and Royal Dutch Shell put the index at odds with peers. Excluding the impact, the index is technically called to open above the overnight highs. Note Fed minutes suggested policymakers saw increased risks facing the US economy given recent market turmoil. Markets appeared to take Fed uncertainty as reducing the odds of further rate hikes this year, happy to have cheap money for longer.  

Sentiment remains positive in light of the recent rally with Asian bourses taking the positive lead from Europe and the US as the global rebound extends attributed primarily to the uptick on oil. Although we are very sceptical about this OPEC output freeze agreement news, given Iran basically said “we like the idea in principal, but now’s not the right time” as it ramps up production following the lifting of sanctions.

Data overnight also showed an improvement in Chinese inflation even though many say food prices were impacted by the New Year holiday. Nonetheless, we saw an improvement in Producer Price deflation which remains in a horrid downtrend, but offers some hope. Thereafter note disappointing Aussie employment data.

In focus today will be the continued fallout from yesterday's questionable Oil output agreement, as well as the Fed minutes. In terms of data, the US Philly Fed and Leading Index will be eyed for any impact from recent market turmoil as well as the US DOE Oil stocks for confirmation of last night’s API data showing a surprise drawdown. Note they don’t always tally.

We also have the BoE’s Cunliffe speaking and the latest ECB minutes which, as with all central bank communication, will be scrutinised for hints about the path for future policy and the balance of opinion among committee members.

US Crude Oil has rebounded from $29/barrel to revisit $31.5 but remains hindered by 3-month falling highs around $32. Brent Crude has bounced to $35/barrel, but is equally hindered by falling highs just 50c higher. Drivers include a surprise drawdown in US API oil inventories as well as the OPEC price stabilisation meeting. Note US DOE Crude inventories out later today.

We, however, question the recent oil rebound on the basis that even if an OPEC/global freeze did materialise (difficult without Iran on-board), who is going to want to give up the opportunity to sell more if possible, especially Iran, when protecting market share has become  so key for so many, especially Iran which is trying to claw back what it lost when sanctions were imposed. Oh, and Russia is now refusing to rule out increases to output in 2016, So we are about as far from a global agreement as we can be.

Gold is languishing around $1205-1210, not exactly suffering from the global risk-on sentiment and equity rally, holding 3-day rising support for now at $1205, although with falling 3-day highs potentially a barrier at $1210. A narrowing pattern suggests consolidation and tends to break in the direction we entered. Which in this case was down, from last week’s recovery highs of $1263.

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

• Centrica Declares Dividend of 8.43p
• BAE Systems Raises Dividend to 20.9p
• Tullow Oil says changed operating procedures at Jubilee Field FPSO
• Vodafone to raise £2.9bn in convertible bonds issue
• Air France-KLM Posts First Annual Profit Since '08
• Go-Ahead Reports Rise in 1H Earnings, Retains FY Views
• Lancashire Reports Fall in Quarterly Profits, Chairman Steps Down
• SEGRO To Develop Logistic Warehouses With Roxhill Development Group
• Amerisur Resources Ecuador-Colombia Interconnector Update
• Rexam's Net Profit Falls; Takeover by Ball Expected by End-June
• Victoria Oil & Gas Interest in Matanda Block in Cameroon
• Indivior 4Q -74% But 2015 Still Ahead of Management Views; Backs 2016 Guidance