UK 100 Index called to open +10pts at 6960, back from overnight non-OPEC production cut inspired highs of 7060 but with 5-day rising lows at 6950 offering support to help extend December’s Santa Rally. Bulls will be hoping for a bounce around 6950 to help the index back towards the key 7000 mark and beyond. Bears would welcome any hint that 6950 might give way for a retrace towards December lows. Watch levels: Bullish 6985, Bearish 6940.

Calls for a positive European open are despite a mixed Asian session and more record highs in the US on Friday. Investors may have welcomed a 4% surge in oil prices overnight thanks to non-OPEC (Russia & friends) agreeing a 558K barrel/day production cut that should satisfy OPEC (it's shy of the 600K target), however, sentiment has been tempered by a very poor start to the week in China (regulations, Trump trade war, policy) that has spilt over to Hong Kong and Australia.

A Reuters report that the Italian Treasury will recapitalise Monte Monte Dei Paschi if private capital plans fail has yet to gain traction possibly because it would represent illegal state aid according to new European rules. Then again, would Europe really want to make Italian bondholders (lots of unhappy households) take a hit while the nation’s banking sector and political situation so fragile?

Japan’s Nikkei is the standout performer thanks to persistent Yen weakness helping exporters and the Oil price knock-on boosting Energy to help take the index positive for the year. Australia’s ASX is stuck around break-even in spite of the Energy rally, with weakness in China (its largest trading partner) hampering bullishness.

There was once again a quartet of record closes for US equity indices as the Dow Jones (+0.7%), S&P 500 (+0.6%), Nasdaq (+0.5%) and the outperforming Russell 2000 (+1.5%) all rallied on Friday. The recently underperforming Retail and Healthcare sectors joined Financials to lead the rally on the former two bourses, whilst a strong performing Tech sector helped the latter to repeat Thursday’s first quadruple record close in December.

Crude Oil prices have begun the week sharply higher after non-OPEC producers pledged to cut their output alongside OPEC members for the first time since 2001, sending both Brent ($56.70) and US Crude ($54) to their highest levels since July 2015. Russia is leading the way but is joined by ten other states in reducing output by an estimated 558,000 bpd as Saudi Arabia claims it could cut production by more than it agreed on November 30. Could the $60 mark be reached before the 2016 ends?

Gold is once again trading at 10-month lows as downward pressure mounts on the safe haven asset in the lead up to Wednesday’s Federal Reserve monetary policy meeting. With the FOMC widely expected to hike base rates for the first and only time in 2016, it will be the outlook for 2017 that comes under the spotlight for investors in the yellow metal as a particularly Hawkish outlook could deter market sentiment further.

In focus today, amid a conspicuous lack of macro-economic data, will be digestion of the OPEC/Non-OPEC production cut deal, the run-in to Wednesday’s Fed monetary policy update and of course the ongoing situation in Italy where Foreign Minister Gentiloni has replaced PM Renzi and where several banks still require swift recapitalisation.

EU foreign ministers meet today for the Foreign Affairs Council discussion ahead of Thursday’s EU Summit. Note the ECB’s Nowotny speaking at 9am and UK Chancellor Hammond just before the European equity market close.

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

• Construction firm Morgan Sindall wins contracts worth about £750m
• JKX says Ukraine's tax cut on new wells to benefit co
• Glencore, Qatar to buy a 19.5% interest in Rosneft
• E2V Technologies says agrees on terms of Teledyne Tech offer
• DiamondCorp says unit sells diamonds recovered from lace mine
• TVH Group lowers acceptance condition for Lavendon deal
• British retailer ASOS to hire 1,500 more staff over next three years
• Heathrow says passenger numbers rise 2.5% in November
• Oil prices soar on global producer deal to cut crude output