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

UK 100 Index called to open -40pts at 7155, extending the bearish head & shoulders top reversal that started late last week and which take us back to 7070. This is bolstered by Friday’s breach of our 7190 watch level announcing a 2-day bearish flag that completed this morning. Furthermore, the daily RSI remains in retreat from overbought and the 4-hourly RSI remains stuck oversold (bearish). Bulls need a see overnight falling highs at 7165 overcome. Bears want to see 7150 give way. Watch levels: Bullish 7170, Bearish 7145.

Calls for a negative open stem from a harmful USD sell-off since Friday, inspired by President Trump’s inauguration speech in which he adopted a very nationalist, protectionist rhetoric that risks rocking the globalisation boat and thus spurred safe haven demand. The result is unwelcome strength in peer FX majors like GBP, EUR and Yen which hurts sentiment towards exporters, whose goods are that little bit less competitively priced and international profits now worth that little bit less.

Japan’s Nikkei is underperforming on account of Yen strength, and in spite of decent macro data, led lower by Telecoms and Property as a pause in the oil price bounce dampens Energy sector demand. Down-under, Australia’s ASX is also in the red driven by losses in Healthcare and Industrials while the weak USD buoys the commodity space especially with Gold prices pushing recent highs again. Chinese equities outperforming with small gains in spite of domestic currency strength.

A positive close for US equity markets will come as a relief to Trump’s economic team, however a mixed reaction to the 45th President’s inauguration speech, particularly the highly protectionist undertone, saw indices off their highs at the closing bell. The Dow Jones led markets, closing 0.5% higher to snap a 5-day losing streak, while the S&P 500 and Nasdaq finished +0.35% and +0.3% respectively as optimism that Trump’s policies will benefit the Telecoms and Materials sectors saw outperformance.

Crude Oil prices have held gains made on Friday as both Brent and US crude recover from near 2017 lows as OPEC members and non-members agree to a new monitoring system to track compliance with November’s production cut agreement. However, focus for many investors will now be on the Oval Office and President Trump for any indication that he will facilitate an increase in US crude production as concerns increased stateside output will negate the impact of OPEC’s cuts.

Gold continues to rally as the post-inauguration US Dollar weakness and fresh safe haven seeking help to buoy demand for the precious metal, although failed overnight to break above $1220 for the second time in a week. A retracement to and bounce from $1200 rising lows support today could see a third challenge arise, with a successful breakout resulting in fresh two-month highs.

In focus today with a dearth of macro data,  will be the continued fallout from Donald Trump’s inauguration speech and the start of his first full week in office. All eyes will be firmly focused on his renegotiation of the North American Free Trade Agreement, due to begin today, as well as desire to ditch Obamacare.

Data-wise, the only release of note is Eurozone Consumer Confidence at 1:30pm, seen marginally improving to -5 from -5.1 previous in what would mark an almost 2-year high. Note ECB President Draghi speaking at 11.30am before Economist colleague Praet at 1.15pm.

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

• Rig builder Lamprell sees lower revenue, to tighten purse strings
• Lamprell estimates 2016 revenue of about $700m
• London's Heathrow Airport cancels 100 flights due to fog
• Petra Diamonds keeps its FY production guidance
• Sports Direct appoints Liberum Capital corporate broker
• Hochschild to resume operations at Peru's Pallancata mine on Jan. 25
• Spire Healthcare opens hospital in Manchester
• Gulf Keystone receives KRG payment for October 2016 oil exports
• Paddy Power Betfair to meet FY guidance despite adverse sports results
• easyHotel says FY trading in line with view
• Genel Energy says to receive payment from Tawke field
• Gold hits two – month high on Trump policy uncertainty, dollar drop
• Sterling rises to one – month highs vs dollar
• Copper gains on weaker dollar, Trump spending hopes
• Oil edges up after producer meeting, but high U.S. output weighs