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

UK 100 Index called to open +20pts at 6685 but in retreat from an overnight failure to retake 6700. This comes after 12hr rising lows were broken and falling highs resistance since last Friday maintained the week’s downtrend. This could usher the index back for another test of 6660/6650 support, something Bears are watching closely as it could open the door to a drop to 6610, completing the recent bearish double-top. The Bulls are still hopeful of a break above 6700 reigniting potential for a rally back to 6800 or better. Updated watch levels: Bullish 6705, Bearish 6675.

A positive market open comes in spite of a negative US close and a mixed session in Asia overnight where lower oil prices on renewed supply glut concerns and a revival of monetary policy uncertainty (less accommodative?) weighed on Energy and Financials respectively. Positive China data was also quickly forgotten while a drop in Aussie consumer confidence and Japanese Industrial Production back negative compounded jitters.

US Energy companies were the headline stateside losers yesterday on the Dow Jones index as markets resume their sell off thanks to the declining the price of oil. A sharp increase in volatility thanks to compounded fears over the impact of a Fed rate increase next week and the course of the US presidential election takes its toll on US investors.

Despite the revival of the global glut worries, oil has found some support overnight thanks to US API data. Nonetheless, it remains in downtrend for the week and could be looking at a bearish descending triangle patterns that lead to a breakdown. Especially if this afternoon’s EIA data shows a big build (bigger than API) that merely reverses last week’s huge draw-down inspired by storms. However, another big draw-down could see this morning’s mild rally continue.

Gold has staged a mild rebound thanks to USD strength subsiding as expectations of a Fed rate hike this month subside, although remains in a strong downward trend over the past week. Analysts expect to test the $1300 resistance turned support mark to be tested before September 20-21 as no major trend change is predicted in the run up to next week's FOMC meeting.

 In focus this morning will be UK Unemployment data which may well show solid jobs data for July, suggesting no Brexit panic, however, August wages growth may post a slowdown that fails to inspire and merely echoes weak UK inflation prints yesterday. Thereafter, Eurozone Industrial Production is seen negative in July adding to fears about the immediate fallout from Brexit.

In the afternoon, US Import Price Data may indicate weakness in August in-line with a weaker USD index since late July while EIA/DoE Weekly Oil Inventories will be looked to for confirmation following last night’s API showing a smaller than expected build, especially in light of the recent sharp sell-off on revived supply glut worries and ahead of this month’s Algeria production freeze meeting.

With the Fed in blackout ahead of next week’s meeting we’ll have to make do with a raft of ECB speakers in the meantime.

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

• British lettings agent MartinCo sees signs of market recovery
• Pure Gym says intends to float on London Stock Exchange
• Rockhopper Exploration sees production for rest of 2016 of 1,500 boepd
• Alliance Pharma says H1 pretax profit up 113 pct
• Builder Galliford Try says sales and prices rose after EU referendum
• Sky invests in Drone Racing League
• Dunelm says full year revenue +7.1%; pre-tax profots +5%
• Secure Trust Bank to list on LSE main market
• BP Azerbaijan says has restarted Azeri Gyuneshli oil platform
• China Resources Beer Holdings considering bid for SABMiller central and eastern european assets; ~$6bn
• Vodafone plans to invest $3 bln into India ops – Economic Times
• Premier African Minerals Drilling Programme on Zulu Commenced
• London copper nudges up on brighter U.S., China outlook
• Oil rises on smaller – than – expected build in U.S. crude stocks