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

UK 100 Index called to open +20pts at 6850, even if yesterday’s bounce from 6810 has already found resistance at a trend line of falling resistance from last Monday’s peak. Friday’s bearish head & shoulders top reversal could still take the index back to 6740, but yesterday’s rebound does mean 6810 support is that little bit stronger. Bears are hoping for a retrace to test 6810 while Bulls are itching for a breakout from the downtrend. Watch levels: Bullish 6870, Bearish 6830.

A positive opening call comes after another mixed session in Asia with early gains for Japanese exporters giving way to Yen strength that sees USD/JPY back testing the key 100 mark. This is derived from a tempering of market hawkishness about US monetary policy - and thus renewed USD weakness - as we edge towards Fed Chair Janet Yellen’s key Jackson Hole speech on Friday.

An oil price under continued pressure is also hampering global sentiment, although a weak Energy sector is failing to hold back Australia’s ASX, the index outperforming regional peers thanks to a weaker USD helping buoy the key commodity space. Note Chinese stocks also registering positive performance.

US bourses closed mostly lower yesterday with markets lamenting a 3% tumble in crude oil prices and absent investors awaiting Fed Chair Yellen’s speech on Friday. Consumer and energy names led declines on what was seen as one of this year’s lightest days volume-wise on the NYSE. Nonetheless, Chicago Fed National Activity beat expectations to post a good improvement on the last print.

Crude prices have fallen foul of Goldman Sachs again, with the investment bank declaring that the recent recovery has not had any fundamental support. Technical support for Brent Crude has kicked in at $48.50, but as Goldman and many others will argue, this is more likely profit taking by short sellers rather than a fundamental bullish reversal.

Interest rate sensitive Gold is still struggling near the floor of its new sideways range, though an early morning bounce on fresh USD weakness could break the 50-hour moving average and evolve into some form of uptrend as the day wears on. Sideways movement is nonetheless set to dominate this week, as markets will be jittery ahead of a much anticipated speech by US Fed chair Yellen on Friday

In focus this morning will be PMI Manufacturing and Services sentiment updates (preliminary) for France, Germany and the Eurozone. Consensus expects prints pretty static versus July’s finals, with Germany and the Eurozone in growth. However, any recovery/worsening of a weak situation in France could dictate market sentiment. UK CBI Trends will be of interest given the divergence between UK inflation, jobs and retail sales since Brexit versus the latest business sentiment indicators

In the afternoon, Eurozone Consumer Confidence, US PMI Manufacturing and US New Home Sales are all expected almost flat but the Richmond Fed may have given up some ground. The latter would be in-line with last week’s intensification of the Empire State’s Manufacturing downtrend. It would, however, be at odds with improvements in the Chicago Fed yesterday and Philly Fed last Thursday.

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

• Persimmon Records 1H Earnings Growth; Confident to Deliver Strong Returns
• Serica Energy's Erskine Field Ramp Up Delayed Due to Maintenance
• Ofgem Rejects National Grid Call to Recover Extra Costs under Drax Contract
• Kier wins UK construction contracts worth over £5bn post Brexit
• Cape says H1 revenue from continuing operations +10%
• Hansteen says occupational market in the UK continues to be strong
• Photo – Me International buys Asda's photo division
• Bookmakers Rank Group sees no direct impact from Brexit