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

UK 100 Index called to open +5pts at 7450, fast approaching the apex of a narrowing pattern. Given its formation from the north and falling highs resistance since late Tuesday, this suggests it is bearish and may result in a bearish break lower. Bulls are looking for a decisive break above 7470  to engineer a recovery. Bears need a breach of 7440 to open the door to further downside. Watch levels: Bullish 7465, Bearish 7445.

A positive opening call comes after Oil - the principal architect of yesterday’s weakness - found support and stabilised overnight around 10-month lows following intensification of global supply glut fears. However, this is only after it breached the floor of a month-long falling channel, putting it under even more pressure merely representing yet another upside hurdle to clear.

It’s also after another mixed session in Asia, echoing that on Wall St. Australia’s ASX is higher, rebounding thanks to gains for its Energy sector, despite lower oil prices. Japan’s Nikkei, however, is offside as Energy and a stronger Yen weigh. Chinese stocks outperform with a delayed response to yesterday’s MSCI index inclusion news.

US equity markets continued to fall from record highs, with the exception of the Tech-focused Nasdaq, as Energy stocks continued to suffer under the pressure of falling crude oil prices. The Dow Jones underperformed as Energy and Industrial names weighed, while the S&P500’s Energy sector fell by over 2% in the session. The Nasdaq avoided the crude oil inspired sell-off, closing sharply higher amid a break out from a 2-week resistance pattern.

Crude Oil prices have taken another leg lower, falling to their lowest level since August overnight. The move comes as an un-named OPEC member casts doubt over the possibility of deeper production cuts by the group, offsetting a drop in US inventories. Despite recovering some $0.50 overnight, both Brent and US benchmarks remain under significant pressure in the bear market confirmed yesterday, failing to retain $45 and $43 handles respectively.

Gold has rallied sharply overnight on USD weakness, confirming a double bottom reversal that has seen the precious metal overcome several resistance levels and breakout from a 2-week downtrend. Having touched an overnight high of $1255, the safe-haven asset is back testing intersecting support at $1252. A breakdown could see a return to overnight lows of $1248, while bulls will be targeting $1260 on the upside.

In focus today will be any sound bites from the EU leaders meeting in Brussels. PM May will present the UK’s intentions for negotiations, including what her cabinet has billed as a ‘generous’ offer to protect the rights of EU citizens living in the UK after Brexit. This before she is escorted from the room to leave the remaining 27 members to discuss matters further. The PM’s visit is her first appearance before European contemporaries since the calamitous election campaign. Can she engineer some goodwill as the 18-month negotiating process kicks off?

In terms of data, UK CBI Trends (11am) are forecast lower in June before largely flat US Jobless Claims (1.30pm). Thereafter, US House Price growth likely held up well in April while Eurozone Consumer Confidence (3pm), albeit still negative, improves a touch. Finally, both the US Leading Index (3pm) and Kansas Fed Manufacturing should post stronger growth for their latest month.

Speakers on the agenda today include the Fed’s Powell (3pm) before BoE outgoing hawk Forbes (7pm). The former is a centrist and so the latter will be of more interest after a dovish BoE Governor Carney was yesterday outdone by Chief Economist Haldane (was dovish, turning hawkish) and last week’s BoE vote being the closest to a hike since 2007, pre-crisis. Watch both USD and GBP.

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

• Firstgroup and partner Trenitalia to bid for upcoming West Coast Partnership
• UK's Imagination Tech up for sale after battle with Apple
• Standard Life expects Aberdeen deal to complete in August
• Inmarsat says Avianca adopts GX Aviation for wifi services
• Go – Ahead group says shortlisted to bid for South Eastern franchise
• Stagecoach updates on West Coast Partnership, South Eastern rail franchises
• Ultra Electronics posts in – line half – year trading performance
• Reckitt Benckiser's unit prices senior notes offering
• GSK wins $235 million from Teva in Coreg patent trial
• Barratt Developments appoints Jessica White CFO
• Saga remains well positioned to deliver against strategic objectives
• Wizz Air opens its first UK base at London Luton
• Philips to acquire Electrical Geodesics for £29m
• Shire says EMA Validation of Veyvondi
• Gold up as U.S. Treasury yields weaken, dollar eases
• Oil prices climb off 10 – mth lows as U.S. stockpiles drop