UK 100 Index called to open -5pts at 7010, furthering the narrowing pattern that began on Friday whilst remaining above the sentimental 7000 mark. Bulls will be looking for a breakout above 7020 7-day falling highs resistance to regain last Sunday’s 7065 non-OPEC-inspired highs, while bears will be hoping risk sentiment leads to a breakdown of 3-day and one week rising lows support at 7000. Watch levels: Bullish 7025, Bearish 6995.

Calls for a flattish open comes in spite of more gains on Wall St (Nasdaq fresh all-time intraday high, VIX volatility index lowest since mid-August) and another mixed session in Asia overnight. Another trio of disturbing terror events in Berlin, Ankara and Zurich are weighing on sentiment, adding to existing geopolitical concerns, as is uncertainty regarding the last chance saloon recapitalisation plan for Italy’s beleaguered Monte dei Paschi di Siena (MPS).

While the clock ticks towards a Wednesday deadline for a key debt-equity swap (and year-end full recapitalisation) of MPS the Italian government has sought parliamentary approval for up to €20bn in public funds (even if it does ramp up national debt) to prop up the bank should a €5bn rescue plan collapse and state aid be required to protect borrowers and avoid a toxic cocktail of sector contagion and further political backlash. 

Japan’s Nikkei and the Aussie ASX are both a half percent to the good. The former is buoyed by a weaker Yen thanks to the Bank of Japan (BoJ) holding pat at its latest monetary policy meeting and sounding more positive about the economy, echoing yesterday’s improving trade data.

Australia’s ASX is higher thanks to strength among defensives and financials. The key Mining space is hindered by fresh US dollar strength holding back industrial metals prices while Gold and Silver rebounds have already turned back in spite of renewed geopolitical tensions. Oil prices are struggling for traction unable to help Energy.

US equity markets were back on the offensive once more yesterday as the Nasdaq posted a fresh intraday all-time high on its way to closing 0.4% higher thanks to outperformance from the Telecoms sector. The Dow Jones and S&P 500 also closed with gains, both up 0.2%, as Tech and Real Estate helped to offset losses for the Energy sector and a weak performance from Financial names.

Crude Oil prices have bounced from resistance-turned-support to maintain its three day rising lows uptrend despite Dollar strength hampering wider commodity space sentiment. That said, Brent Crude has been unable to hold above the $55 mark and US Crude above $53 as investors are yet to warm to the OPEC/non-OPEC production cut deal.

Gold price is back on the decline having enjoyed 3 sessions of gains, with risk sentiment doing little to attract investors as the US Dollar once again rallies due to the Bank of Japan maintaining accommodative monetary policy and Fed Chair Janet Yellen claiming the US jobs market is at its strongest in a decade. Support at $1132 will need to hold for the precious metal to avoid falling back to post fresh 10-month lows.

In focus today will be UK CBI Retail Sales for December, seen ticking back from 26 to 20. However, there’s potential for an upside surprise after last Thursday’s strong November official Retail Sales data, another data print suggesting UK consumers unperturbed by political uncertainty from Brexit.

In the afternoon, can the China Conference Board Leading Economic Index deliver another improvement in November to inspire confidence in stabilisation of the world’s #2 economy?

Away from data, UK PM May will be questioned by lawmakers about Brexit, an important exchange given that the UK Supreme Court’s decision on triggering Article 50 is not out until January.

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

• Old Mutual says raises $291m from OM Asset Management share sale
• Oil steady in timid trade ahead of holiday season
• Lloyds to buy MBNA from Bank of America for £1.9bn
• Britain's Flybe names former head of rival CityJet as CEO
• Flybe says to start flying Heathrow to Scotland routes
• UK's CMA says will not refer Co – Op Group store sale to phase 2 investigation
• Copper holds above 1 – month low on prospects of brighter 2017
• LSE Group says in exclusive talks with Euronext over French LCH Clearnet ops
• British court orders Vedanta's Zambia unit to pay government $100m
• GSK's Viiv announces positive results from initial HIV phase III studies
• Novartis says reaches agreement to buy Texas – based Encore Vision
• Gulf airline giants face job cuts as growth slows