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

UK 100 called to open +40pts at 6265, continuing its northerly grind towards June highs of 6300 amid a strong recovery from 5900 lows. The Bulls will be hoping that the referendum result leads to a break above 6300 that takes us back to the 6430 highs of the year. The Bears will be hoping the outcome delivers a retrace towards those 5900 lows. An early morning bounce from 6250 bodes well for further gains, but beware what has been a steep rate of ascent. Watch levels unchanged: Bullish 6275, Bearish 6230.

A positive European open comes in spite of a mixed session in Asia which has come back from steeper overnight declines, and follows a positive US close. Markets appear to be fighting to maintain bullish momentum in the run-up to tomorrow’s UK referendum despite heightened uncertainty as to the outcome. Will we stay or will we go?

Japan’s Nikkei is back above 16000, helped by a slightly weaker Yen, even if USD/JPY remains within spitting distance of recent lows driven by alternative safe-haven seeking on Brexit jitters. This after the USD basket bounced on Fed Chair Janet Yellen telling the Senate that a rate rise could be 'appropriate in the coming months'.

But Yellen has said 'rate hike in the coming months' since the turn of the year. And in aggregate she took a rather cautious tone. Note also that while she said a Brexit vote might not result in a US recession, ECB President Draghi said he is prepared for all eventualities come Friday.

A stronger USD is, however, failing to hinder commodity prices much, especially oil, with bullish momentum holding into the middle of this UK referendum week. Australia’s ASX breakeven despite Energy names benefiting from Oil powering back to $50/barrel and Chinese bourses posting further gains.

US Bourses had a positive Tuesday after Crude prices pared some of their earlier losses to give oil stocks a boost. Janet Yellen’s cautious comments also helping to placate cheap-money-loving markets, with references to both Brexit and domestic issues helping to reassure in that sense. Note falling highs so far this week on the Dow and S&P indices serving to test the rising support from the 16 June lows.

Oil is back up around the highs north of $50 on hopes another drawdown in US inventories will be evident in data from the EIA today, echoing that from the API overnight. However, the possibility of shale becoming competitive again at current levels and a ramping up of production in Canada (recovering from the wildfires that previously dented output), Iran (because it wants to) and Iraq have been a barrier to further progress and look set to remain so, at least in the shorter term.

Gold, having traded more or less flat in Asian trade overnight, remains under pressure from that breakdown from a bearish head & shoulders top pattern yesterday, followed by a bearish flag pattern. Support for the US Dollar Basket and bullish market momentum negating safe haven demand can be blamed. Note Yellen’s cautious message failing to weaken the US currency despite rate hike expectations fading even further into the distance.

In focus today, away from market-moving Brexit polls and in terms of of data, will be the afternoon’s US House Price and Existing Home Sales data seen growing steadily again in April. The latest reading from the China Conference Board  Leading Economic Index will also be eyed for any improvement on the only slight advance in May for signs about the slowing and transitioning economy.

Eurozone Consumer Confidence is seen remaining at -7 in the troubled region, below zero as it almost always has been (bar around the turn of the century), but holding well off its recent lows. US Oil Stocks will be of interest given the bigger-than-expected draw on API inventory last night, which saw oil prices regain the key $50 handle overnight.

After a cautious testimony highlighting the risks of Brexit and stubbornly low US growth, inflation and productivity to congress yesterday, Fed Chair Yellen is scheduled for a second grilling that could well prove a repeat performance, but you never know what curveball questions will be thrown her way.

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

• Debenhams like-for-like sales fall 0.2 pct in third quarter
• Angola state oil firm ‘Sonangol’ finds gas in Kwanza basin
• Hornby reports FY pretax loss, announces turnaround plan - proposes to raise 8 mln stg via share issue
• Credit Suisse would cut UK Index target by 6 pct if Brexit occurs
• Elementis sees FY EPS below market expectations
• Brexit could force banks to relocate jobs away from London – EU's Hill
• Citi says close 'In' vote in EU referendum could still undermine EU and UK stability
• UK energy regulator consults on SSE's revised pricing and connection plans