UK 100 Index called to open +5pts at 6750, sideways 6740-6760 overnight to keep the recovery from yesterday’s 6650 4-week lows intact. Another up-leg is thus possible but falling highs since early October remains a hurdle at 6800. Bulls need a breakout beyond 6760 overnight highs. Bears require a breach of rising lows at 6740. Watch levels: Bullish 6770, Bearish 6730.

A lacklustre European open comes in spite of a positive Asian session which echoes gains on Wall St. Advances by big Bank and commodity names are derived from relief at the absence of post-referendum turmoil in Europe (so far) coupled with a weaker USD giving a boost to metals prices and Brent Crude Oil, the latter testing $55 for the first time since July 2015.

Italian Prime Minister Renzi has agreed to put off his resignation until the nation’s 2017 budget has been approved, reducing the risk of snap election and another populist backlash. Contagion fears also eased by suggestions of a weekend state bailout of Banca Monte dei Paschi di Siena due to concerns of a €5bn recapitalisation being at risk by the withdrawal of a key participant.

While the USD Basket is off its worst levels, we note GBP/USD holding around 2-month highs which represents a drag on the foreign profits of UK Index stocks. A EUR/USD off its best levels, however, may provide continued support to Germany’s DAX exporters, especially after surprisingly strong Factory Orders data this morning.

While Japan’s Nikkei and Australia’s ASX are posting gains of 0.5% (JPY flat versus USD, RBA left rates at lows ahead of GDP data tomorrow), note China in the red after the PBOC fixed the currency higher following recent USD weakness while regulators are stepping up efforts to curb an insurance sector binge on equities.

It was another record close for the Dow Jones, despite uncertainty in Europe, whilst the Nasdaq outperformed its peers up 1% as the Tech sector finished near the top of the pile. A strong performance from Financials helped the Dow offset losses from Healthcare names, while the S&P 500 also benefitted closing higher by 0.6%.

Crude Oil prices have edged lower as an element of profit taking surfaced following the first $55+ reading of Brent Crude since July 2015. The confirmation of a meeting with non-OPEC producers on Saturday will see all eyes back on Vienna as the production cut deal negotiated last week is expected to be finalised, however reports that the group once again increased output in November will raise fresh scepticism.

Gold, despite posting fresh 10 month lows yesterday afternoon, has since rallied back above $1170, suggesting fears of the rejection of Italy’s constitutional referendum have not yet completely disappeared despite yesterday’s relief rally, helped by a weakening USD. That said, a break below $1170 could see prices fall to $1162 and beyond before the Fed’s FOMC meeting next week.

In focus today, away from any developments in Italy post-referendum, especially with regards to its banks and prime-minister, will be Eurozone Q3 GDP which is seen confirmed (3rd reading) at 0.3% QoQ and 1.6% YoY.

Any further commentary from the UK Supreme Court hearing on Article 50 (day 2 of 4) would also be of interest given its significance and  the rising potential for a Tory rebellion regarding the government’s excessive secrecy about the UK’s negotiating position on Brexit.

This afternoon, US Non-Farm Productivity is forecast to have rebounded even more than thought in Q3 while Unit Labour Costs growth likely slowed. Later, US Factory Orders growth is expected to have accelerated in October after a quiet Aug-Sept, although the ex-transport figure may be more closely watched, excluding the more chunky and less regular contracts.

The Eurogroup of finance ministers continue its meet in Brussels and we also hear from EU President Juncker this morning just after the European open. Fed speakers fall silent on account of the FOMC blackout ahead of next key week’s monetary policy meeting.

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

• Northgate sees FY results in line with expectations
• Industrial equipment hire firm Ashtead hikes annual results forecast
• Victrex says FY revenue down ~4%
• Wolseley upbeat on forecast as U.S. growth boosts quarterly profit
• Thomas Cook buys Co – Op out from travel stores business for £56m
• Drax Group proposes to buy Opus Energy Group
• easyJet passenger numbers rise 2.9% in November
• Imagination Tech returns to profitability in first half
• Arrow Global to buy Italy's Zenith Service SpA for 17m euros
• Co – op Group to exit from travel JV with Thomas Cook Group
• Kaz Minerals announces trading halt of HK shares
• Oil dips as OPEC joins Russia in upping output ahead of production cut