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

UK 100 called to open -15pts at 6145 (ex-div -7pts), still moving towards the 6150 apex of this week’s narrowing pattern, supported by 3-day rising lows but held back by 3-week falling highs. As highlighted yesterday, this pattern tends to result in continuation of the prevailing trend - in this case down from April’s 6430 highs. But it could also help revive last week's reversal from near 2-month lows if we get a break to the upside that can clear this week’s highs of 6180. Watch levels: Bullish 6185, Bearish 6120.

Calls for a negative open derive from a mixed/cautious Asian session that followed a negative US close (S&P 500 down 1%, biggest fall in a month). While oil prices jumped on a surprise drawdown in US crude inventories it failed to offset some poorly received corporate earnings reports, notably from the retail sector (Macy’s) which has a natural read across to stateside consumer sentiment. A dried up IPO market is also proving a hindrance.

Nonetheless a USD basket back below 94.0 has given a lift to industrial commodity prices (copper, nickel, aluminium, zinc) overnight although the precious metals Gold and Silver have retreated from yesterday’s highs. Interestingly, the Yen has followed the USD lower to the benefit of Japan’s Nikkei exporters with the index outperforming.

The Aussie ASX is underperforming despite a weaker AUD, with a drop in consumer inflation expectations adding to the possibility of further rate cuts from its central bank - the RBA. Higher commodity prices not helping either, while Chinese and Hong Kong stocks are held back a stronger renminbi fix from the PBOC.

Oil prices back around recent highs after US stockpile data showed a surprise drawdown which gives hope to a turn in the continual build from a global supply glut. Further support comes from outages in Canada and Nigeria as well as another E&P corporate bust (Linn Energy) which signals the pain the stateside industry is in amid an environment of lower prices. Oil back at recent highs, but major breakouts still required.

Gold back from its highs despite the weaker USD, having failed to better $1280 yesterday and retreating to $1270. Nonetheless, still holding above $1260 which could allow for another assault on the falling may highs at $1290 should risk appetite go south again. Note the World Gold Council saying demand for the safehaven surged to its second highest level in Q1 as investors doubled their holdings amid the great reversal from 5r lows.

In focus today, Eurozone Industrial Production is almost certain to be weak after poor reads from regional constituents like Germany, France and Italy. As the Brexit debate intensifies listen out for what BoE Governor Carney has to say on the topic within the central bank’s update. Thereafter improved US Import Price inflation data could influence Fed rate hike expectations along with chat from the Fed’s Mester and Rosengren around the European close.

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

• Vesuvius ses FY underlying trading similar to H2 2015
• Phoenix Group says on track to meet 2016 cash generation target
• Stobart FY revenue from cont ops rises 8.6 pct
• Aldermore says Q1 net loans to customers up 6 pct
• SIG says revenue up 9.3 pct for four months to April 30
• Moody's – Brexit poses relatively modest risks for the global insurance industry
• ITV downgrades first – half ad revenue forecast
• Daily Mail says CEO Martin Morgan to retire
• Mondi says Q1 underlying oper profit 269 mln euro, up 14 pct
• Supergroup expects full year profit of up to 74 mln stg. Joint founder James Holder to quit business
• Vedanta Resources' FY core profit falls 38 pct
• FirstGroup gets approval to launch open access rail services between London and Edinburgh
• Tullett Prebon 2016 revenues to end – April up 2 pct on last yr
• Oxford Biomedica says Chief Development Officer Blake to leave in Aug
• Galliford Try expects FY results to be in line with its expectations
• Royal London Mutual Insurance Society posts record Q1 for new business
• 3I Infrastructure to raise up to £480 million
• Shell reports unit restart at Scotford, Alberta facility on May 11 – community line