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

UK 100 Index called to open -25pts at 7475 (nb: ex-divs -20pts), but well off its overnight lows of 7425, thanks to a duo of intersecting support kicking in to engineer a bounce. Bears will highlight yesterday’s bearish engulfing candlestick and RSI back from overbought. Bulls will point to how we are already back above 7450 March highs and still in an uptrend. Bulls would welcome a break above 7490, Bears another breach below 7470. Watch levels: Bullish 7490, Bearish 7470.

A negative opening call (-5pts excl. ex-divs) comes after Asian bourses followed US counterparts lower (biggest drop since September) amid rising political drama in Washington that has seen safe havens like Bonds, Gold and the Yen outperform at the expense of risk assets like equities and commodities.

Note however, oil demonstrating remarkable and refreshing resilience ahead of this month’s OPEC meeting, likely helped by USD weakness as confidence in the US administration and its policy plans wanes even if the Fed is expected to hike next month.

Japan’s Nikkei underperforms on account of Yen strength (safe haven seeking + USD weakness) hurting exporters and mixed GDP/inflation. Australia’s ASX is in the red, but to a lesser degree, dented by IT and Healthcare but likely propped up to some extent by resilient Oil and commodities benefiting from USD weakness alongside positive jobs data.

Wednesday’s latest US political drama saw US indices close sharply lower, with the three major bourses suffering their largest one day falls since September. The Dow Jones shed over 370 points, only eclipsed in the past 12 months by 9 September’s 395 points and Brexit’s (24 June) 610 points, lead by losses for Goldman Sachs, with the Financial sector also proving a burden for the S&P 500 while the Tech-heavy Nasdaq Composite underperformed its peers, down 2.6%.

Crude Oil prices have held around recent highs as sentiment is buoyed by declining US inventories despite missing forecasts, while continuing US dollar weakness makes the price of the commodity cheaper in relative terms. Brent crude is holding above support at $52 while the US benchmark trades a touch lower than $49. With inventory data out of the way for another week, investors will once again be looking for further OPEC members to pledge to extend current production cuts.

Gold’s impressive rally yesterday has hit the brakes as safe-haven demand peters out and the precious metal encounters long-term intersecting resistance. Having rallied $25 (or 2.3%) yesterday, its largest one day gain since 24 June (Brexit), gold has since fallen back from resistance at $1262/troy oz., showing signs of exhaustion after the rally on US political fears.

In focus this morning will be UK Retail Sales (9.30am) for the expected rebound in April following a weak March. Other data of note includes the Philly Fed (1.30pm) which probably fell to its lowest since December, a third straight decline from a 33-year peak in Feb adding to mixed US data of late.

ECB Minutes (12:30pm) from April will be dissected by EUR watchers given the more hawkish tilt that recent meetings have taken amid an improving Eurozone economy, albeit with inflation continuing to undershoot. Any more clues on the potential path for policy normalisation could sway the currency.

Speakers today include the ECB's Mersch (twice: “Vision 2020 des Eurosystems” in Frankfurt this morning and an afternoon keynote presentation at the “Government Borrowers Forum” in Luxembourg). Colleague Lautenschläger presents at an IBF Board Meeting, German Chancellor Merkel talks after the European close and the Fed’s Mester speaks at the Economic Club of Minnesota.

Note, ITV hosts a 5-way party leader UK election debate at 8pm, although the headline most likely to be drawn will be non-participation of PM May and Labour leader Corbyn, both declining the invitation. Instead, the leaders of the Lib Dems, UKIP, SNP, Plaid Cymru and Green Party will be left to battle it out on their own, without the heads of the UK’s two largest political parties.

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

• Oil prices dip as supply remains ample despite output cuts
• Burberry profit falls 21% ahead of new CEO arrival
• Land Securities warns Brexit uncertainty hitting London office market
• Royal Mail profit falls, expects letter volume decline
• National Grid reports 14% rise in FY adjusted operating profit
• Petrofac non – executive director Jane Sadowsky resigns
• Hargreaves Lansdown says assets up 10% on market gains, inflows
• Hargreaves Lansdown says Chairman Mike Evans to step down
• South Africa's Investec reports 17% full – year profit jump
• Mothercare FY sales up 6.3% to £1.2bn
• Experian posts FY profit before tax $1.07bn
• Marston's H1 revenue up 4.5% to £202.6m
• Thomas Cook posts revenue rise ahead of key summer season
• Tesco – target Booker sees profit rise 15%
• Lloyds CEO buys 50,000 shares in the bank
• 3I Group posts total full year return of £1.6bn
• Exxon says to open gas stations in Mexico, invest $300m
• London copper slips on worries over Trump
• Gold holds gains as U.S. political crisis deepens
• UK Conservatives' support slips in YouGov poll – The Times