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

UK 100 Index called to open -30pts at 7495 having given up some ground from Friday’s positive post-Election close. Bulls will want to see falling highs at 7500 overcome to revive optimism about a rally towards recent 7600 record highs. Bears need a breach of rising support at 7490 to open the door for a 40pt decline. Watch levels: Bullish 7515, Bearish 7480.

A negative European open is expected after a strong Friday night tech sell-off which has rolled into Asia overnight to make for a poor start to the new trading week. Sentiment remains dented by politics following the UK’s hung parliament and shift in the balance of UK political power, although a bounce in GBP from its election-result lows is reversing Friday’s FX boost to the UK Index ’s international exposure. A USD sell-off also means EUR strength that hurts Germany's DAX.

Japan’s Nikkei underperforms due to weakness for Softbank, owner of the largest tech fund in the world and thus impacted by the US sector sell-off. Australia's ASX outperforms thanks to strength for oil and Copper, less affected by Tech sector weakness elsrwehere.

US equity markets closed sharply lower on Friday, with the exception of the Dow Jones, as Technology stocks ended their recent period of outperformance. Despite trading a fresh intraday high after opening, the Nasdaq closed 1.8% lower as major Tech Stocks Facebook, Apple, Amazon, Netflix and Alphabet all fell by over 3% as investors engaged in widespread profit-taking. The S&P500’s Tech sector also suffered, falling by 2.5% to send the index marginally lower, however the Dow avoided the losses of other bourses, advancing 0.4% on Financial sector strength.

Gold has continued to remain under pressure, having failed to overcome $1295 resistance last week despite heightened political uncertainty, as investors look ahead to key central bank meetings later this week. A widely expected rate hike from the US Federal Reserve, if undertaken, would add a further bearish element for the safe-haven asset, however a weaker USD is keeping the precious metal underpinned at $1267.

Crude Oil prices also remain subdued, with both Brent and US benchmarks trading in tight ranges around June lows ($47.50-48.50 and $45.20-46.20 respectively). A weaker USD has helped both benchmarks test channel ceilings overnight. However, both failed to overcome resistance, falling back to test rising lows support. A break lower could see both benchmarks back to the channel floor.

In focus today, with macroeconomic data noticeably lacking, will be continued aftershocks from last week’s UK election and hung parliament. PM Theresa May delivered a very half-hearted weekend cabinet reshuffle, echoing her loss of legislative power and a revived opposition. Discussions begin tomorrow with Northern Ireland’s DUP about a ‘confidence and supply’ agreement. This is not a coalition, as we had in 2010, and nothing like a done deal. It could yet face significant difficulties in terms of policy divergence and a softer Brexit stance from over the water.

Major events this week include central bank updates from the Fed on Wednesday the Bank of England on Thursday and the Bank of Japan on Friday. While the former is expected to hike rates for the second time this year (third since Dec) as the US data improves, the latter two will hold pat and maintain accommodative stances designed to support their own economies.

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

• Weir says to buy oil & gas tech provider KOP Surface for $114m
• Astrazeneca says no new safety signals from dapagliflozin trials
• Avocet Mining posts FY group gross profit $13.1m
• Genel recieves $8.38m from Kurdistan govt for March oil sales at Taq Taq field
• Rio Tinto says gets Glencore proposal, to respond in due course
• Echo Energy appoints Fiona Macaulay as chief executive officer
• Gold edges up on weaker stocks, dollar ahead of Fed meeting
• Oil prices driven up by futures bets, but market remains bloated