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

UK 100 Index called to open -5pts at 6805, still trading a tight 40pt range, holding the breakout above 6780 but yet to clear 6820. This sideways action is not unexpected with major central bank updates looming. It could prove the necessary consolidation before another break to the upside (last week’s 6930 highs?). Extension of a 3-day recovery rally could be driven by more stimulus from the BoJ tonight and/or the Fed holding pat tomorrow evening. The pause could also be the precursor for a retreat to 6640 should Kuroda and/or Yellen disappoint. Watch levels: Bullish 6825, Bearish 6760.

A slightly negative start echoes a mixed but equally subdued Asian session overnight and US bourses closing around breakeven yesterday evening. Caution ahead of central bank policy decisions has a tendency to see risk appetite dialled back. The Fed will either stick or twist (market implied probability of a hike just 20%; unlikely, but still possible). The BoJ update, however, is much more complex with a key review on the efficacy of existing stimulus (struggling) and potential for multiples tweaks.

Also hampering sentiment is a swift retrace in oil prices. The credibility of bullish production freeze rhetoric from Venezuela is understandably questioned in the run-up to next week’s Algiers meeting, while worries about additional supply (Nigeria, Libya) worsening the global glut add to the mix. We have been here before though. Remember back in April? Uncertainty about the US election also sits uncomfortably with investors, the weekend’s stateside attacks playing more in Trump’s favour while further sabre-rattling from North Korea never helps.

US indices gave back early gains thanks to increased oil prices with markets closing slightly lower on Monday as investors gear up for tomorrow’s Fed monetary policy update. Due to a lack of significant macroeconomic data and events, markets followed the movements of oil closely, eventually settling just below breakeven, weighed down primarily by telecoms and tech darling Apple.

After yesterday’s gains thanks to a positive chat from Venezuela’s President about a potential production freeze, oil has subsequently retraced its gains (US Crude back at $43.30, Brent at $45.5) to maintain two-week downtrends. As investors in the dollar-denominated commodity look to tomorrow’s monetary policy decisions in Japan and the US, a follow-on statement from Venezuela that the market remains 10% oversupplied will do little to boost marketplace expectations.

Gold edged slightly up for the second session in a row as it looks to consolidate support in the run up to tomorrow’s monetary policy decisions.  The next key test for the rate-sensitive metal will be the $1320 mark, although should the US Fed surprise investors with a rate increase gains made over the weekend are likely to be swiftly reversed.

In focus today (on yet another very quiet day for macroeconomic data) is US Housing Starts and Building Permits data for August, with the expectation for a slight contraction in housing starts likely to be offset by a similar amount in building permits (21k and 20k respectively). However, after yesterday saw the NAHB housing index climb back to its highest level since 2005, will today’s data indicate a further strengthening for the US housing market?

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

• Sports Direct to Appoint Independent Firm to Review Governance
• GVC Holdings Records 1H Revenue Growth; CFO to Step Down
• IG Group Performed Relatively Well In 1Q
• Pennon On Track To Meet FY Expectations
• Ultra Electronics CORVID PayGate launched
• GlaxoSmithKline Names Emma Walmsley as New Chief Executive
• Kingfisher Reports Rise in 1H Earnings
• French Connection's H1 revenue falls 8.7%
• Faroe Petroleum raises FY production guidance
• Takeaway.com IPO books are covered on the base deal size – bookrunner