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

UK 100 called to open -35pts at 6130, having retreated from 6200, unable to get beyond 10-day rising highs resistance. Note support at 6130 via trendline of falling highs from 21 April. Conflicting technicals for Bulls and bears are keeping things exciting. 

6200 failure revives bearish hopes that 6060 May lows are revisited (bearish flag?) before a breakdown to complete a May triple-top at 5900. The bulls are hopeful that a move above 6160 can maintain rising lows from last Thursday for another attempt at 6200 for that May double-bottom to 6350. Note range traders content to remain in the 6060-6200 range from March and most of this month. Watch levels: Bullish 6165, Bearish 6115.

The negative opening call is a result of a negative US close which has weighed on Asian trading overnight after some solid US data and a trio Fed speakers struck a surprisingly hawkish tone in terms of rate rise probability for June. This has dented sentiment with the US dollar rallying back to recent highs to the detriment to the commodity space, although Oil is holding up remarkably well as it remains focused on reconquering $50/barrel.

Japan’s Nikkei outperforming after GDP data easily beat expectations, and delivered an even bigger rebound once downward revisions to Q4 are factored in. A stronger USD and thus weaker Yen is also supportive, but unable to send the index positive. Australia’s ASX is on the back foot despite a weaker Aussie dollar as commodity exposed names struggle, while Chinese equities underperform despite positive property price data showing acceleration in April. Then again perhaps the latter merely fuels fears of a credit bubble and hard landing  for the key economy.

US bourses ended the day in negative territory after the Fed’s Lockhart, Williams and Kaplan added their signatures to the proverbial petition calling for a June interest rate hike. In typical fashion, they’ve all jumped on a couple of bits of decent macro data and conveniently rid their minds of everything else. Rate rises are of course designed to rein in unsustainable economic growth, curb runaway inflation and encourage people to squirrel away money rather than spending it, so it’d be reasonable to see US bourses under pressure today.

Recent CPI, housing starts, capacity utilisation and industrial production beats do seem to suggest the US economy can withstand a rate hike, but it would probably also really enjoy no rate hike, especially given the Trump/Brexit political headwinds that are blowing.

USD strength is making for some short opportunities in FX while pressure is seen mounting on commodities, with bearish RSI divergences on Brent and WTI hourly charts. Neither marker looking like breaking $50 today. Gold is back at 3-week rising support which is holding up so far with the yellow metal nonetheless still under pressure, having failed to make a new high since early May’s foray above $1300.

In focus today will be the fallout from the Fed member comments last night given that minutes from the latest Fed meeting are set for release this evening, sure to spice up the debate on rate hike timing. UK unemployment seen largely stable and so wages growth may garner more attention after cooler UK inflation reads yesterday. Eurozone Consumer Price Inflation (CPI) is seen falling flat in April and remaining in deflation territory on an annual basis to highlight the region’s travails and ECB’s uphill struggle. US Oil inventories could be exciting this afternoon given last week’s surprise drawdown which helped prices higher. Another one could signal a turning point and help us closer to that key $50 level.

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

• Marston's says on track for the full year
• Playtech posts in – line growth in gaming daily average revenues

• SABMiller full – year revenue hit by strong U.S. dollar

• John Menzies chairman to retire

• AstraZeneca's Lynparza fails in gastric cancer combination test

• Skyepharma sees strong growth in 2016 revenues

• SSP Group says second half started in line with its expectations

• Antofagasta chairman sees another year or two of low copper prices

• Burberry to overhaul retail operations after 10 pct fall in profit

• Countryside Properties says well placed to deliver 2016 expectations

• Ultra Electronics wins $18.4 million electronic warfare contract

• UBM says on track to achieve full – year outlook

• Moody's says Brexit not a big threat to asset managers' credit fundamentals

• SSE sees total investment, capex of about 1.75 bln stg in 2016/17

• LSE to hold merger vote in July

• Galliford Try wins student accommodation projects worth 102 mln stg

• Interserve wins 25 mln stg Hampshire contract

• Arm Holdingss