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

UK 100 Index called to open +30pts at 5980 having recovered from late Friday weakness and a negative start for the new week, with futures testing lows of 5900 overnight. Falling channel still valid from last Wednesday until 6000 can be breached to the upside. Longer-term downtrend also still in play until the 6035 highs of Thursday can be bettered. Watch levels unchanged at: Bullish 6050, Bearish 5940.

The positive opening call comes thanks to Asian markets starting the new week on the front foot, ignoring a rather fatigue-induced subdued US close and poor Asian data (China Business Sentiment, Japanese PMI Manufacturing), preferring to focus on an oil price off its lows, still hopeful of production cuts by OPEC-Russia and after another decline in the Baker Hughes rig count.

A weaker Japanese Yen is helping Japan’s Nikkei although the currency remains in a clear February downtrend while Chinese stocks are higher on hopes the new securities regulator will ease the current IPO bottleneck and revive the nation’s equity market and retail investor appetite. Aussie ASX outperforming thanks to higher commodity prices (Oil, Copper, Nickel, Iron Ore) even if the safehaven precious metals (Gold, Silver) are back under pressure.

Wall Street bourses closed mixed on Friday as oil plumbed sub $30 levels again, despite a reduced rig count (9th straight drop). Fed hawk Mester spoke yet more of the same (gradual rate hikes…) while noting the oil situation and equity market volatility do pose risks to  the US economy.

In focus this morning will be preliminary PMI Manufacturing & Services updates in Europe, with France seen on the cusp of growth/contraction although Germany and the region should remain safely in growth territory along with the US figure for manufacturing in the afternoon. The fallout from the Brexit referendum situation in the UK will likely accelerate while we have New York fed speaker Potter on the wires after the European close. 

Crude prices are managing to maintain a tenuous 10-day uptrend as markets continue to be encouraged by the prospect of production freezes, with the latest ‘meeting’ being between Nigeria’s president and the king of Saudi Arabia. It’s unclear what, if anything, will be achieved here given the unwillingness of anyone to lead the way and risk sacrificing market share.

A more risk-on session in Asia has seen gold Gold retreat to test rising support comfortably above $1200. Since considerable global uncertainty remains, we’d expect to see $1210 hold in a slow, steady continuation of the uptrend.

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

• Bovis Homes 2015 Pretax Profit +20%; Sees Further Growth in 2016
• HSBC Swings to Loss, Sterling Knocked by Brexit Fears
• HSBC Swings to 4Q Net Loss of US$1.33 Billion
• Cairn Energy, EnQuest Increases Stake in Kraken Development
• ABF raises earnings guidance on FX and better Primark