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

UK 100 Index called to open -15pts at 6845, with its 1-week downtrend intact following Friday’s repeated failure to breach 6870 and overcome the solid trend of falling highs. The Bears are focusing on an overnight retreat to last week’s 6842 lows that reinforces the downtrend and increases the possibility of a breakdown towards 6800. The Bulls are hoping that 6-week intersecting rising support at 6840 helps prevent any further declines and engineer a turnaround, double-bottom recovery and breakout to 6900. Watch levels: Bullish 6865, Bearish 6835.

A soft opening call for European equities comes after a largely negative start to the week in Asia that echoed a weak US close on Friday. Japanese stocks are the only bright spot this morning with the USD bounce fuelled by hawkish Fed chat delivering a reciprocal boost to Nikkei exporters via a weaker JPY. Either that or it was the rather bizarre sight of PM Shinzo Abe dressed up as Super Mario in Rio to accept the Olympic flag as next host.

Markets remain very much focused on global monetary policy this week after conflicting Fed chat last week and ahead of this Thursday's US Kansas City Fed Jackson Hole Symposium. As much for the outlook for US monetary policy as for the ramifications for the Euro, itself hemmed in between a Fed wanting to tighten and the Bank of England in easing mode post Brexit.

US stocks ended the week in the red, pressured by increased expectations of an Autumn Fed rate hike ahead of this Friday’s speech by chair Janet Yellen, at which markets expect her to be a bit more specific about things. Of course, she might not be, but Vice Chair Stanley Fischer thinks things are close enough to target to consider raising US interest rates soon.

Crude prices are still buoyed by hopes of an output freeze, following some well-timed and likely completely spurious OPEC comments that have seen money managers cut bearish bets on the commodity by 26%.

Gold has fallen foul of a stronger USD as markets re-adjust to a more hawkish (still dovish actually, just a little less so than before) Fed outlook. The USD Basket has made a bounce of rising support in a rising channel, which could see further upside continue to weigh on the whole commodity space and of course their Miners.

In focus today we see the Chicago Fed National Activity Index pushing all other macroeconomic data prints into the remainder of the week, well Tuesday before European and US PMI Manufacturing and Services. The update is key given the city’s importance to the US economy as a whole and in light of the mixed data we have seen of late.

Traders will be on the lookout for an improvement on the prior reading, which itself surprised handsomely in posting the best figure since January. They’ll also note the Philadelphia Fed print of last Thursday, which went back above breakeven for only the third time this year (as expected), whereas just one week ago the Empire State Manufacturing Index (from New York) intensified its June downtrend.

Suffice to say that a beat here is unlikely to unseat the Chicago Fed Governor Charles Evans from his dovish stance on US monetary policy. Although he is notoriously fickle and Fed comments have been blowing hot and cold in the run-up to this Friday's Jackson Hole Fed meeting. It is here that markets will be desperate interpret all available chit-chat to get a better handle on when the US Central Bank is really looking to hike stateside interest rates next.

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

• Polymetal to Expand Amursk Gold Processing Plant
• Premier African Minerals Corporate Update
• Allied Minds Secures $20m Debt Facility from SVB
• Pfizer nears $14bn takeover of Medivation