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

UK 100 Index called to open +35pts at 7545, holding yesterday’s breakout above 7540. This extends the recovery from last Thursday night’s 7380 lows to give bulls hope of June’s 7600 record highs being revisited. Bulls will be looking for progress beyond 7553 overnight highs; Bears are watchful for any breach of 7535 rising support. Watch levels: Bullish 7555, Bearish 7530.

A positive European open comes in spite of another weak finish stateside. Tech remains on the back foot, although the sell-off showed signs of easing on Asian bourses. Despite choppy trading these are largely positive, helped by expectations of a Fed rate hike tomorrow and buoyancy in commodities; Metals sidestepping. GBP and EUR weakness continue to help both the UK Index and DAX amid political excitement on both sides of the channel.

Australia’s ASX is the standout performer, up handsomely as it catches up from a national holiday with gains for Financials, Property and Energy. The former may be helped by the prospect of a Fed rate hike tomorrow. Energy is supported by Oil prices climbing on Middle East tensions (Qatar, Iran) overpowering supply glut fears. Some also see the ASX as a good a home for those cashing out from overstretched markets elsewhere round the world.

Japan’s Nikkei is the lone decliner among the major Asian indices, despite Yen weakness as the USD finds its footing ahead of tomorrow’s anticipated fed hike. Gains for Energy are helping counter US-inspired Tech weakness which is thankfully abating. Just a minor Tech correction?

US bourses closed lower on Monday as Tech sector weakness continued after the weekend. As a result, the Tech-focused Nasdaq underperformed, posting its worst two day performance of the year so far. The blue-chip Dow Jones and S&P 500 indices were less affected, although still closed lower as Tech stocks led decliners, offsetting gains for General Electric on the former and Telecoms on the latter.

Crude Oil prices, despite rising overnight, remain a way off yesterday’s highs of $49 (Brent) and $46.75 (US) as falling highs resistance hinders rallies from last week’s 1-month lows. Investors will be keenly awaiting today’s monthly OPEC oil report for production cut compliance figures while also remaining on the lookout for further clarity on yesterday’s reported Saudi Arabian supply cuts to the US and Asia.

Gold continues to trade in a tight $1263-$1270 falling channel ahead of tomorrow’ meeting of the Fed’s FOMC, narrowing further to within $1263-67 overnight. The meeting is widely expected to end with the second rate hike of 2017, however the main takeaway for investors will be the future outlook for further hikes. A hawkish outlook could keep the downward pressure on the precious metal, while a dovish revision to the forecast four hikes could see gold recover to last week’s 2017 highs.

In focus today will be UK May Inflation prints (9:30am). With the Bank of England’s MPC meeting on Thursday to update on policy, and Average Weekly Earnings Growth figures out tomorrow, investors will be looking for any increase in CPI (and the BoE’s preferred Core measure), especially with Sterling (vs USD) having hit an 8-month high during the month; its post-Brexit weakness is cited by BoE Chief Carney as the reason for high inflation. CPI is already accelerating at a much faster rate than Wages/Earnings, squeezing consumers. Any further uptick will merely increase pressure on the BoE to act to protect the purse strings of the average Brit.

German ZEW Surveys (10am) are expected to build on four months of solid growth, the Current Situation reaching its highest since 2015. This afternoon, US Producer Price Inflation (1:30pm) is forecast to have slowed in May, but remain close to the Federal Reserve’s 2% inflation target.

ECB uber hawk Weidmann speaks at 8:10am while colleague Lautenschlaeger features on a regulation panel at London’s International Monetary Conference (10am). Note also OPEC’s Monthly Oil Report (12pm) for the latest insight into group-wide compliance with production cuts.

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

• Petrofac secures Kuwait training contract
• Hastings Group says conversion of Hastings Investco shareholding into direct shareholdings
• UK's N Brown says Chairman Andrew Higginson plans to step down
• UK's CMA says Heineken/Punch must resolve concerns over pub merger
• Small blast at British police station in Cyprus, criminal motive seen
• Industrial equipment hire firm Ashtead's annual profit rises 7%
• UK's Halma FY profit rises 17%, aided by acquisitions
• Restaurant Group names Paul May as non-executive director
• Ted Baker says positioned to meet expectations for full year
• Fiserv to buy UK mobile payments pioneer Monitise for £70m
• Madame Tussauds – owner Merlin says Manchester, London attacks hit demand
• Builder Crest Nicholson says UK election result may bring uncertainty
• Capita hopes for improved profitability in second half of 2017
• Legal & General Group's estimated solvency II surplus at £7bn
• Oil rises on Saudi pledge to make real supply cuts to Asia, U.S.
• Gold holds steady; market awaits cues from Fed meeting