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

UK 100 called to open -10pts at 6220, having found support here overnight around the trendline of rising lows from 19 May. This could mean we are at the end of yesterday’s Bearish head and shoulders top reversal, although a retreat to 6200 is still possible. Thereafter potential remains for resumption of the uptrend for another attempt to breakout at 6300 for a bullish inverse head & shoulders bottom reversal to 2016 highs. The bears are looking for a break below 6200 to maintain the 3-day downtrend . Watch levels: Bullish 6245, Bearish 6195.

Calls for a negative open come as Asian bourses followed US counterparts lower. This comes as risk aversion dominates in response to a 10yr sovereign bond yields flirting with record lows (negative in Japan), calling into question global monetary stimulus efforts. Lingering concerns about the state of the US economy following last Friday’s poor jobs report and ahead of the Fed’s latest update next week also weigh as the US dollar bounces to the detriment of the commodity space. Brexit fears persist after the latest polls and TV debates and with less than a fortnight to go until voting begins.

US bourses had a down day, with the Dow failing to bed in above 18000 on a weak lead in Europe and toppy oil prices. A surprise spike in Wholesale Inventories may be taken as a sign of US economic growth and, while this could explain the recent disappointing factory orders print, sales were also seen surging by 1% in April - a 12-month high.

Crude prices are back from yesterday’s highs but managing to remain supported above $50 ahead of today’s Baker hughes rig count with markets awash with speculation about increased activity in the Permian Basin of West Texas. That’s exactly the area in which US shale producers are known to operate. The prospect of more competition in the market gives cause for caution into the weekend, though not oil does tend to somewhat ignore fundamentals in favour of random sentiment.

Gold is set for its 2nd week of gains, although note pressure in the form of a stronger USD hampering the yellow metal, which also finds itself in a bearish rising wedge pattern with divergent technicals. A break below $1263 should confirm a breakout to the downside and $1257.

In focus today will be the BoE/TNS UK 12-month forward Inflation estimate although it is unlikely to surprise us with a jump above the central bank’s 2% target. UK Construction Output is nonetheless seen rebounding in April, albeit remaining weak over the year, adding to Wednesday's very strong read for Industrial and Manufacturing Production.

Whatever the UK data, however, it is unlikely to overpower the UK’s intensifying referendum debate which saw Leave advocator, former London Mayor and Conservative leader/PM hopeful Boris Johnson attacked by Remain representatives during a live TV debate. And with Polls/Odds delivering a mixed and changing picture almost daily the 2 week run-in is set to be very exciting with plenty of market moving impact.

This afternoon, US Consumer Confidence is seen tempering a little in June although it remains strong. Thereafter, keep an eye out for the US Baker Hughes Rig Count. Last week it delivered its biggest weekly gain since Dec, suggesting a $50 oil price is more attractive to idle stateside shale/frackers. A similar read, and third increase in four weeks could suggest a bottoming out of the downtrend.

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

• Shares in Tesco of Turkey plunge 20% after sale announcement, Migros rises
• Airbus says completes sale of Dassault Aviation shares
• Home Retail CEO to step down after Sainsbury's takeover#
• Tesco's Turkish unit sells 95.5 percent of its shares to Migros
• Wandisco says CFO to step down
• SThree first – half gross profit rises
• Fuller Smith & Turner FY pretax profit 39.2 mln stg vs 36.1 mln stg
• Allergy Therapeutics names Nick Wykeman as finance director
• Oil firms Det norske and BP to merge in Norway in $1.3 bln share deal
• Oil falls on stronger dollar; high refinery demand lends support
• London copper faces biggest weekly drop in a month