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

UK 100 called to open -10pts at 6535, still holding above 6500 in a sideways consolidatory shift which may yet prove a pause before the next leg higher. This is bolstered by that bearish head and shoulders top we highlighted yesterday failing to pan out, with only a teasing test south rather than the full correction to 6400. Bulls and bears watching for a breakout/breakdown from the current 36hr 6510-6570 sideways channel. Our watch levels are: Bullish 6575, Bearish 6495.

The negative opening call comes as renewed worries about Brexit fallout, exacerbated by property fund suspensions, dragged Asian equities lower overnight along with further declines by oil on global growth fears. And while sterling plumbed 31yr lows versus the dollar, a resurgence in safe haven seeking saw sovereign debt post fresh record lows, the Japanese Yen strengthen and gold rally to 2yr highs.

Japan’s Nikkei is underperforming regional peers on account of a stronger Yen denting sentiment for exporter equities. Australia’s ASX is in the red as a stronger USD (bullish flag breakout?) hurts the commodity space and continued oil price declines deal a blow to energy. China stocks are the only bright spot, holding just above breakeven thanks to a lower renminbi fix by the PBOC in response to the USD rally.

US stocks fell yesterday amid continued Brexit-related global uncertainty, as traders and investors returned from the Independence Day holiday to start selling again (it would seem). Crude oil prices also had something to do with the lacklustre performance on Wall St. as they weighed on US energy stocks.

Oil did find support overnight, though it looks poised for more downside today given reports of an impending uptick in OPEC production. Mounting concerns about Brexit weighing on global growth sentiment and a stronger USD on the back of the weak Pound Sterling are also playing their parts. Note however that UK oil majors could remain supported by favourable FX translation (they get billed in GBP and book revenues in USD).

Gold jumped to a fresh 2-year high despite the stronger USD, all but confirming that haven seeking is currently a dominant driver in the markets. An overnight breakout above the post-Brexit vote high $1358 found resistance and some profit taking at $1371. The day’s outlook remains bullish as long as $1365 holds as support.

In focus today - from a financial standpoint, away from the long awaited Chilcot inquiry into the Iraq invasion - will probably be the Fed’s latest FOMC meeting minutes this evening and how the committee views the landscape for policy normalisation in light of June’s surprisingly weak US jobs report. However, with the meeting having taken place in mid-June, well ahead of the Brexit vote and with so much having happened since, the information we get may be of limited use.

And with the BoE pledging additional stimulus support this summer that could weaken the GBP even more and thus further strengthen the USD, many see central bank action on this side of the pond likely keeping any Fed rate hikes from the markets door until well into next year. Is US data as important as it once was?

Data-wise, the only real prints of significance come this afternoon with updates for US PMI Services and ISM Non-Manufacturing, both seen improving a touch in June. Away from data, note ECB President Draghi speaking around the European open followed by the Fed’s Tarullo mid-afternoon.

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

• Oil prices edge up amid Brexit concerns, supply risks
• Topps Tiles says too early to ascertain implications of result of UK referendum
• Britain's business minister calls for corporate, personal tax cuts
• Melrose to buy residential products maker Nortek for $1.44bn
• Exillon says June average daily production of 14,364 bbl/day
• Purecircle sees FY 2016 sales not less than $138m
• London Capital says Brexit has been materially positive for revenue and profit
• Retail bank Secure Trust says has virtually no exposure to commercial property market
• Booker Group says on track to meet full – year expectations
• Aviva aims to increase dividend pay – out ratio to 50% in 2017
• Aviva plans to up pay-out ratio, says too soon to judge Brexit impact
• Tullow Oil in $300m convertible bond offering
• Carillion wins new contracts in Oman, N. Ireland
• easyJet passenger numbers rise 5.8% in June
• UK car sales fall in June – preliminary industry data