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

UK 100 called to open -10pts at 6220, having retreated sharply following breakdown from a 5-day consolidation range. The overnight bounce at 6200 bodes well for this being digestion before another up-move and attempt to complete a bullish triple bottom pattern at 6350. However, we note potential for overnight price action to represent a bearish flag that could result in another down-leg if 6200 support gives way. Watch out for 6250 breached support turning resistance. Watch levels: Bullish 6240, Bearish 6190.

The negative start comes after a red session in Asia, following the US lead. This as markets digest a raft of mixed economic data that has dented optimism as we kick off the new month; Aussie Manufacturing PMI offsetting positive GDP, Japanese Capital spending slowing  and Chinese PMI manufacturing failing to inspire. Sentiment still fragile it would seem while the Fed shouts about a summer rate hike and UK Brexit polls suggest the Leave camp taking the lead.

US bourses closed mixed amid some dreary, rate hike negative US macro data. Chicago PMI and Consumer Confidence missed  expectations, while Dallas Fed Manufacturing seriously missed expectations, all this giving little lift for hawks seeking a positive trend ahead of the 15 June FOMC meeting. This in turn could be considered favourable for equity markets. Don’t forget though that there are occasions on which bad data is seen as just that - bad! Especially when markets have been getting used to the idea of a US Summer rate hike based on economic recovery.

With a not inconsiderable sell off on the UK 100 yesterday evening following a certain Guardian poll in which a load of Guardian readers appeared to be in favour of a UK exit from the EU, one must also consider how Brexit may be factored in to decision making processes on the other side of the pond.

Crude oil prices are still trading below $50 as traders await the outcome of tomorrow’s OPEC meet in Vienna. Don’t get hung up on this meeting though - there will be no production cuts announced, let alone agreed upon, and there’s little else to be gleaned from OPEC these days in terms of indications of future pricing for oil. Better to concentrate on the global growth outlook and risk appetite, and oil’s correlation with stock indices. In that sense, keep an eye on the USD and the US equity markets ahead of the FOMC mid-month.

Gold has recovered a little overnight, helped by safe haven demand on the one hand and the USD weakening post US macro-data on the other. Looking ahead, we’ve still got the pomp and ceremony that comes with Friday’s monthly US jobs report, with anything positive within that likely to be pounced upon by the Fed. This is of course significant for the USD and thus Gold. Come Friday afternoon we should have a clearer idea of direction for the yellow metal. Until then, it’s likely to be choppy.

In focus this morning in terms of macro-economic data, alongside digestion of what was a mixed overnight batch from Asia, will be Eurozone PMI Manufacturing reads. Consensus is expecting pullbacks for both Spain and Italy in May, while the Eurozone edges higher but confirms mixed prospects internally; Germany still growing but France stuck in contraction, albeit coming up off 12-month lows.

In the UK, while the Brexit debate hots up following a surge by the Leave camp in the latest poll, Consumer Credit growth and Mortgage Approvals. These are seen slowing in Apr as the electorate holds back on big purchases, pending the referendum outcome. Note the UK PMI Manufacturing print seen improved in May, but still in contraction after dropping sub-50 last month for the first time in over 2yrs.

In the afternoon, as discussion continues about the realistic prospect of a Summer Fed rate hike in light of a raft of poor US  regional manufacturing data lately (Empire, Richmond, Philly, Chicago, Dallas), we note US PMI manufacturing seen confirmed in growth territory, but languishing down around 4yr lows and maintaining what is a clear 2yr downtrend.

US ISM manufacturing could well bolster the PMI read in terms of a downtick, even if the former is off its lows having bottomed out at the turn of the year. However, the prices paid component could prove more important, confirming some welcome inflationary signals for the Fed along with a pick-up in US Construction Spending data before the Fed’s US Beige book delivers markets with the latest US economic assessment via  anecdotal information on economic conditions from each Fed District.

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

• Wolseley accelerates restructuring as demand remains subdued
• Telford Homes posts profit leap, says lack of London housing will drive growth
• Halfords says full – year underlying EBITDA up 4.3 pct
• Cobham says intends to raise 506.7 million stg by way of rights issue
• UBM buys Content Marketing Institute for $17.6 mln
• Oil firm DNO receives $16.3 mln payment from Kurdistan Regional Government
• Lamprell says units signs agreement regarding establishing Maritime Yard
• Meggitt says completed private placement of of senior notes for $600 mln
• SABMiller says S.Africa's Competition Commission has recommended Ab Inbev deal with conditions
• LondonMetric Property FY16 Pretax Profit Halves; Plans to Reposition Business