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

UK 100 called to open +45pts at 6550, having made a stellar breakout through 6400 yesterday and gone on to better 6500 for the first time since last August. And while we have drifted back a touch overnight, Bulls will be excited at the prospect of a bullish inverse head & shoulders reversal worth a whopping 900pts if the breakout proves genuine.  Back to 7100? Concerned Bears will point to recent rally being led by high-yielding Oil and defensives like Pharma, Tobacco, Consumer staples and Utilities, suggesting preference for safety rather than risk assets due to Brexit-inspired uncertainty. Watch levels: Bullish 6570, Bearish 6520.

A positive opening call comes as the global post-Brexit vote rally got a shot in the arm via hopes (a borderline confirmation) of more stimulus from the Bank of England this summer to offset the economic impact of uncertainty related to the UK's referendum result to leave the EU. And while markets like the idea of more stimulus from any major central bank, they especially like the idea that a weak GBP sterling keeps the USD strong and thus fends off the Fed from a rate rise for a good while longer. Yay! Low rates for longer!

Asian markets higher despite a stronger Yen (blame BoE Governor Carney) and a worsening in deflation signs and household spending, coupled with mixed industrial trends. So markets are banking on more stimulus for the BoJ too! And data from China was also mixed with Caixin Manufacturing contraction worsening and the official print dropping back to break-even, but Services (potentially more important as the Chinese economy transitions) showing a welcome climb higher. More stimulus here too? Australia’s ASX underperforming as global growth fears and a strong USD stifle non-safehaven commodities.

US bourses closed up yesterday to put stateside indices in the green for H1 2016. We heard from Dallas Fed Governor Kaplan, who said US GDP could be affected negatively by Brexit, while his St Louis colleague Bullard disagreed while nonetheless reiterating his dovish outlook for US interest rates. This all after the BoE governor Mark Carney hinted at a UK Summer rate cut/more QE! Keep up now.

Crude oil prices look toppy this morning with the USD stronger following Carney’s dovish comments and the nature of his rhetoric (plus warnings of potential global contagion) hitting growth sentiment. Both markers are potentially mid-bearish head & shoulders reversal patterns. If Brent breaks below $49.60, we could be on for another $2 (4%) of downside. A similar situation for WTI could see a break below $48.20 fuel a further 4% of declines towards $46.40.

Gold’s a tough one to analyse as we round off the week. With major global indices rallying on stimulus hopes, yet defensives and utilities outperforming (it’s not exactly a risk-on rally), and while stimulus normally favours safehaven metals, we’d expect volumes to be light given detrimental FX strength in the USD and preference for higher yielding safe haven equities. Nonetheless, the gold price has broken out above this week’s falling highs and could test $1340 today.

In focus today will be PMI Manufacturing figures with Spain, Italy and the UK seen stable, Germany and the Eurozone as a whole and the US advancing, but France seeing its contraction worsening. Eurozone Unemployment is forecast to have ticked up in May.

In the afternoon, US ISM Manufacturing and Prices Paid is seen flat despite hopes for PMI improvement while US Construction Spending is forecast to have rebounded. This before we get the latest on US Baker Hughes Rig Count likely suggesting more shale drillers coming back to the game thanks to oil back at $50.

Speakers today include the ECB’s Coeure and Nowotny as well as the ECB/Bundesbank’s Weidmann and the US Fed’s Mester all of whom may have something to say about the outlook after the Brexit vote and given the pledge from ECB and BoE to remain supportive of markets.

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

• Premier Oil defers test of financial covenants
• AstraZeneca sells two dermatology drug rights to LEO Pharma
• Trinity Mirror expects interim results to match its expectations
• British Gas offers smart meter users free power at weekends
• Numis Corp appoints executive directors
• GVC Holdings seeks transfer to London's premium listing
• Britain's Daily Mail newspaper backs May for prime minister
• Koovs says Roy Naismith stepped down as CFO
• EnQuest makes small reserves upgrade to Crathes reservoir in North Sea
• Imperial Brands appoints Therese Esperdy as non – exec director
• Gulf Keystone updates on Shaikan production milestone
• RSA completes sale of its operations in Uruguay
• LEO Pharma Enters Biologics Through Strategic Partnership With AstraZeneca
• AstraZeneca enters licensing agreements with Leo Pharma in skin diseases
• Valeant Pharmaceuticals announces new licensing arrangement for Brodalumab in Europe