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

UK 100 Index called to open -15pts at 7025, testing support-turned-resistance after a minor breakdown overnight. Sideways overnight 7020-7025, not unsurprising as we tip-toe towards the festive break and await news from the Italian banking sector, the index is hindered by 24hr falling highs. Bulls need a breakout to 7030 to boost risk appetite. Bears need twin support at 7000 to be troubled. Watch levels: Bullish 7035, Bearish 7005.

Calls for a negative open come after US bourses closed lower, the Dow failing to hit 20,000 (again) and the USD giving up more ground, taking steam from the Santa Rally. Most Asian markets have been on the back foot overnight amid thinner pre-Christmas trade as investors await news about a state rescue of Italian lender Monte dei Paschi (MPS).

Japan’s Nikkei is just below breakeven as the JPY comes off its lows to hurt exporters, however Australia’s ASX is a half percent to the good as heavyweight defensives (staples, telecoms) make up for a commodity space ignoring a weaker USD and Oil holding above yesterday’s lows.

US equity markets shied away from fresh record highs despite widespread optimism, as a lack of direction-providing macro data, sliding crude oil prices and a weaker US Dollar all weighed during a low-volume trading session. The Dow Jones retreated from the 20,000 mark as its post-election darling Goldman Sachs contributed the most losses, whilst the Real Estate sector dragged the S&P 500 0.25% lower, posting an almost identical loss to the Nasdaq.

Crude Oil prices suffered yesterday as US Department of Energy inventory data showed an unexpected build, however remains supported by 2-week rising lows support. The first US stockpile increase in five weeks follows reports of an expansion in Libyan crude oil production, which could see Brent and US crude further pressured before the January 1 implementation of the OPEC/non-OPEC production cut.

Gold remains trading in a narrowing $1125-1145 trading channel, however continuing US Dollar weakness is seeing the price of the precious metal rally from the channel floor. A range of US macro data prints this afternoon could result in fresh USD strength, placing renewed pressure on gold, although any further negative Monte dei Paschi news

In focus today will be any update on the situation regarding teetering Italian lender Monte dei Paschi di Siena. Yesterday saw its recapitalisation plan fail to secure an anchor investor for a rights issue nor enough interest for a debt-for-equity swap. Parliament has approved use of public funds to shore up the bank and avoid sector contagion but an official announcement on their deployment is yet to be made.

Data-wise, US Q3 GDP (third est) is forecast slightly stronger than the second estimate, much stronger than Q2 while a 1.7% Core PCE inflation print - a Fed preferred metric - continues to improve. Durable Goods are seen weak in November after a strong  October.

Thereafter, US Jobless Claims are expected largely unchanged while US House Price growth holds firm. After the GDP prints, note Personal Consumption growth seen holding up despite Income growth dipping and inflation markers broadly unchanged. While the Chicago Fed remains weak, the Kansas City Fed is forecast improved.

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

• Inchcape Buys Multi-country Scale Distribution Business for £234m
• Legal & General Announces Appointment of Jeff Davies as CFO
• Stobart says to operate flights from London Southend via Flybe franchise deal
• Hss Hire FY outlook unchanged from that set out in 9–month trading updat
• 3I Group to buy UK, Italian, Spanish assets from Eisner
• Standard Chartered's Thai unit to transfer retail banking business to TISCO
• Copper drifts as trade volumes dwindle ahead of holiday
• Oil prices fall as U.S. inventories, Libya output weigh