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

UK 100 Index called to open +35pts at 6865 after an overnight extension of its 4-day bounce to almost 240pts. The narrow rising channel of the last week has potential to regain early September highs of 6930. Note, however, a struggle as we write to overcome the best levels of yesterday afternoon and the trend of falling highs since 6 Sept. The Bulls want to see 6880 cleared to clear the path back to 6930. The Bears, in contrast, hope for a retrace to test rising support at 6830/40. Updated watch levels: Bullish 6880, Bearish 6840.

A positive start comes after markets welcomed the Bank of Japan (BoJ) leaving its already negative interest rates unchanged overnight and tweaking its existing stimulus programme. This buys governor Kuroda some time and leaves the door open for more rate cuts/policy easing which has seen the Yen weaken to the benefit of Nikkei exporters and helped financials rally.

As expected, the BoJ has offered an interesting policy update for markets to digest and is a good effort at dispelling uncertainty about global CBs losing potency and running out of ammo. And while the Fed is unlikely to make any policy change tonight, its message and sure-fire subtle hints certainly could, especially in light of fresh Yen weakness sending the USD Basket to September highs.

Market sentiment is being helped by the prospect of accommodative policy for longer, even if the BoJ is struggling to deliver. Hopes are also high that the latter's action leaves the Fed in a bind, forcing it to hold off from hiking at all this year. An oil price rebound (US API stocks drawdown) is also providing support with barrel prices now well off their fresh September lows. Can it join Copper’s rebound this month on renewed China optimism, something helping Aussie ASX and Miners.

US indices closed flat helped by late gains as US crude finished trading on a positive note ater API data. The small movement in markets over the past few days reflects the view that investors are treading water in the run up to this evening’s Fed policy update after the Bank of Japan leaves interest rates unchanged and made only minor stimulus tweaks overnight.

Oil is in the midst of a rally with Brent at $46.95 per barrel and US Crude testing $45.00 per barrel after weekly API data from the US showing a surprise second inventory decline in as many weeks. Further reports that the informal OPEC meeting later this month in Algeria may turn into a formal session may boost short term price movements, and should official US government inventory figures later today also show a drawdown (not currently expected) this could provide a more credible basis for a sustained rally.

Gold has seen a swing in prices this morning, with the bulls taking the upper hand after the Bank of Japan’s policy meeting this morning saw no change in interest rate. $1320 remains the key test for the metal during trading today before the US Fed meeting this afternoon, with a second no change decision from central banks potentially helping the precious metal sustain early gains.

In focus today will be the fallout from the Bank of Japan’s (BoJ) stimulus tweaking announcement overnight ahead of the US Federal Reserve’s policy update tonight. While no hike is expected from across the pond, the accompanying statement and press conference could provide some spice in terms of expectations for the timing of its next interest rate hike. Could December really be on the cards or is event risk simply too much and next year more realistic?

Data-wise watch for the impact of UK Public Finances on GBP Sterling with consensus expecting a rise in August. The China Conf Board Leading Econ Index could also have a knock-on for commodities given the recent revival of optimism on the world’s #2 economy. Although oil prices have rebounded from their lows ahead of next week's OPEC-led meeting in Algiers, watch out for US Crude Inventories with an expected  stockpile build potentially tempering the bounce, although API data did deliver a drawdown last night.

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

• UK's Majestic Wine warns on full – year core earnings
• Insurer Saga says on track to meet its full – year targets, sees little Brexit impact as H1 profits rise
• Interserve JV wins £81m UAE mall expansion contract
• Amerisur Resources sees 2016 exit production rate of 7,200 bopd
• SABMiller's central European assets attract Asian, European bidders
• Diageo makes good start to new financial year
• Salary of BHP CEO cut in half after Brazil mine disaster
• JKX posts higher production for start of year to August
• Imperial Innovations invests £5.1m in biotech firm Artios Pharma
• Sinclair Pharma on track to meet 2016 sales guidance
• Pan African Resources says FY revenue +43.1%
• Northgate continues to trade in line with its expectations
• Inditex outperforms rivals in first half, profit +8%
• Yen skids after BOJ changes policy framework
• Oil prices rise on reported US crude stock draw, firm Japan imports
• London copper below 4 week high ahead of central bank calls