UK 100 Index called to open -5pts at 6995, having traded sideways overnight 6990-7010 following yesterday’s late rally. Breached rising lows since yesterday afternoon and failure to hold 7000 is a concern. However, the index is still technically on a second leg north after Tuesday’s bounce from 6875. Bulls need 7010 to be bettered to open the door for 7050 and all-time highs of 7130. Bears require a breach of 6980 overnight lows. Watch levels: Bullish 7015, Bearish 6975.

Calls for a flattish open come after a mixed Asian session followed a positive US close, albeit one which failed to deliver yet another batch of all-time highs. Oil prices turning down again over the last few hours is dampening sentiment, adding to a downtrend since Monday’s non-OPEC production cut hope highs. A USD off its peak is also offering mild hindrance to a UK Index and DAX that have hitherto benefited from its rally via GBP and Euro weakness.

Like last Friday, it’ll be interesting whether we get another risk-on session into the weekend as investors do their best to extend an already decent Santa Rally and continue to spur Wall street towards the magic 20000 mark on hopes that 2017 will be a year of change. For the good. In the US at least.

A fresh bout of Fed/Trump-inspired dollar strength (14yr highs) yesterday has helped Nikkei exporters post further gains overnight on account of an extension of Yen weakness. Australia's ASX is posting small losses with the dollar-denominated commodity space pressured by the Greenback’s strength, although a rebound for safehavens Gold and Silver are helping offset weakness in industrial metals and oil.

US equity markets surged yesterday as the full force of the Financial sector led the Dow Jones to within touching distance of 20,000 points before cooling off into the close. The blue chip index reversed Wednesday’s loss to finish just shy of yet another record close as the Fed interest rate hike saw names such as Goldman Sachs leading the winners. The S&P 500 also benefitted from a hawkish Fed-inspired Financials rally to close 0.6% higher, whilst the tech-heavy Nasdaq improved 0.4%.

Crude Oil prices have marginally improved since yesterday afternoon, however still remain in a technical downtrend. With a dearth of OPEC headlines since the IEA’s monthly report on Tuesday, prices have failed to break out of week-long falling highs resistance. Tonight’s Baker Hughes US rig count release could provide further insight into US shale operations pick up since the OPEC production cut deal.

Gold prices have staged a slight recovery, back above $1130 after finding its first (albeit weak) level of support after two days of declines following the Fed’s interest rate hike and more hawkish outlook. A brief pause in the USD rally will help any relief for the safe haven over the course of the day, however should Eurozone CPI disappoint this morning, a fresh bout of Euro weakness translating to Dollar strength could weigh on the precious metal.

In focus today will be Eurozone November Inflation (CPI) for any indication that the ECB’s continued accommodative policy stance is making inroads towards solving the region’s long-standing stagnation. Expectations of a swing back to deflation territory with a 0.1% decrease last month will not be what ECB President Draghi wants to see, however a continued climb for the annual read (0.6% exp. vs 0.5% prev.) will be a relief.

Elsewhere, UK CBI Trend Orders for December are seen moving further into negative territory whilst Selling Prices are seen marginally improving. US Housing Starts are expected to have pulled back in November versus last month’s blowout figure, although still well above the 2016 average, whilst Building Permit numbers likely cooled from last two months’ strength.

Speaker-wise, we have the ECB member, Bundesbank leader and QE-hater Weidmann at 9am before the Fed puts forward its first sacrificial lamb - Richmond Fed President Lacker - following Wednesday’s US rate hike and a whole week of blackout enforced silence. Enjoy.

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

• Rosneft CEO says firm has received funds from Qatar/Glencore deal
• Total Declares Its Second Quarter 2016 Interim Dividend of 0.61 Euro Per Share, Available in Cash or in New Shares with a 5% Discount
• Rentokil forms JV with Germany's Haniel for workwear, hygiene units
• UK airline Monarch on track to meet 2016 earnings forecast
• Balfour Beatty sells street lighting interests for £33m
• Costain says Highways England renews northern England contract
• Johnston Press sells East Anglia unit to Iliffe Media for £17m
• London housing rents fall for first time since 2010 – lender
• Oil edges up as planned oil production cuts start to materialise
• Copper edges lower as U.S dollar strengthens