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

UK 100 Index called to open -5pts at 6865, with the downtrend since Monday’s 14-month highs unabated. Coupled with another bounce at 6850 overnight, this takes us a step closer to a breakdown from what is now a 3-day bearish descending triangle. The Bulls will be hoping that the current bounce can challenge those falling highs and deliver a breakout. The Bears are focused on the potential for a breakdown to result in a drop back to 6800. Watch levels: Bullish 6885, Bearish 6845.

A largely breakeven open for equities comes in spite of mild gains in Asia and the US as investors try their very best to close the trading week with at least a modicum of optimism after a rocky few days. 

A USD dollar off its worst levels has offered Japan’s Nikkei and its exporters some respite via a slight pullback in the Yen, which is managing to hold above the all-important 100 mark versus the greenback. Note Australia’s ASX benefiting from Oil price gains helping Energy and the weaker USD boosting commodity prices and the share prices of Miners.

The great debate about global monetary policy (Fed to delay hiking; ECB and BoJ likely to ease further next month; BoE digesting this month’s bazooka) continues with gusto. In summary though, easy policy looks like it is going nowhere soon. Which is good for risk appetite - equities in particular - with said policy forcing the hunt for yield (and better returns) to spill over from bonds to stocks.

US equities markets trudged higher once more on a still-rising oil price. Gains are likely being tempered though, with markets potentially pricing in an overly dovish outlook for US monetary policy. Fed chat from William Dudley underpinned this, with the New York Governor highlighting the strong jobs reports from the past two months that have helped quell fears of slowing growth that surfaced earlier this year. In addition, San Francisco’s Williams said it makes sense to return to a (mechanical?) slow and steady approach to raising rates ASAP.

The uptrend in crude oil prices has steepened, with Brent and WTI trading fresh 8-week highs and both markers in a well-defined bull market.  Even though there are signs that production is falling in some minor oil producing nations, much of the recent oil price strength has been driven by mania, with traders desperate not to be left out of what could be an impressive rally. Remember that it’s highly unlikely that major oil producers, who compete with each other, will agree to cooperate.   

Gold’s narrowing pattern is still in play with the yellow metal currently stuck below its 50-hour moving average. Note the USD Basket testing the floor of its 3-month rising channel - a bounce therein potentially taking gold back towards $1344 while a breakdown puts $1350 on the cards.

In focus today, amid a distinct lack of tier one macro data, and in light of recently muted US inflation prints that have served to counter fears of a US rate rise, Canadian consumer headline inflation is seen slowing to breakeven in July. The Core measure is, however, expected to have held firm at 2.1%, just above the central bank goal (a dream for many major peers) of 2.0%, while Retail Sales growth is forecast to have accelerated in June suggesting rising sentiment among consumers north of the US border.

The US Baker Hughes Oil Rig Count for last week will be looked to for further clues about the optimism of stateside drillers with regard to a recovering oil price, boosted this week by a weak USD in response to July's Fed minutes and hopes of an OPEC production freeze at an informal meeting next month. We’ve had these before though. Simply another case of words speak louder than actions to boost the price? Central bankers have showed them the way.

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

• Hammerson to List On Johannesburg Stock Exchange on Sept 1
• Old Mutual OMAM completes investment in Landmark Partners
• Independent Oil & Gas Completion of the Skipper Appraisal Well
• EASYJET - Press spec of £16 offer from AerCap (Telegraph)
• WILLIAM HILL - Upped guidance to top end, good start to 2H
• Shire rumoured to have submitted a formal offer for RADIUS (FT)