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

UK 100 Index called to open -40pts at 7405, testing intersecting falling support but still holding above the round number 7400. Bulls need a break above overnight 7410 highs (since 2am) to trigger a bullish reversal. Bears are itching for a meaningful breach of 7400 (7397 overnight lows) to allow for a retrace to 3-week lows of 7360. Watch levels: Bullish 7410, Bearish 7395.

Calls for a negative European open come after a mixed US close and tech sector sell-off that spilled over into Asia overnight. The US Dollar has also turned back towards 13-month lows, denting sentiment by way of a stronger GBP and EUR, following another Senate vote against healthcare repeal, just hours ahead of key GDP data expected to show a surge in Q2 growth.

Despite a weak USD and Oil holding above $49/$51/barrel, Australia's ASX underperforms as financials and materials give up some of their recent strength. Japan’s Nikkei is lower on account of the US Tech sell-off, disappointing results from Nissan and soft retail sales data even if inflation was stable and unemployment improved.

UK Index corporate news includes Barclays missing estimates with a Q2 loss of £1.4bn dented by an exit from Africa and another £700m PPI provision. This is in contrast to peers BNP, UBS and Credit Suisse all beating expectations this morning. BT Q1 adj. EBITDA -2% on costs to avoid litigation, but it backs its FY18 forecast.

Int. Cons Airlines has managed a double-digit profits growth in H1 as cheaper oil and a strong Easter offset a power outage and it expects H2 unit revenue to rise. Rightmove results (H1 revenues & profits +10%) are at odds with peers Foxtons and Countrywide yesterday, and it is confident it can meet FY expectations.

US equity markets finished mixed on Thursday as a strong initial opening reversed, being led by a Tech sell-off. Weakness in the sector was highlighted by the Nasdaq falling 0.6%, however the S&P500 also suffered, closing 0.1% lower. The Dow Jones bucked the trend, finishing positive and at another fresh record closing high as Verizon closed 7% higher and Boeing extended its post-results rally.

US companies reporting today include Dow oil components Chevron and ExxonMobil, major US carrier American Airlines, pharmaceutical giant Merck and tyre manufacturer Goodyear. Note online retailer Amazon fell 3% in after-market trading as the company’s earnings per share missed estimates by almost 50%, a performance blamed on high investment.

The Crude Oil rally has stalled overnight as the US dollar recovers somewhat from 13-month lows, while an element of investor profit taking can also be expected. Both Brent and US benchmarks have traded at their highest levels since 1 June overnight ($51.60 and $49.20 respectively). The performance of the USD and tonight’s Baker Hughes Rig Count will be in focus for investors today

Gold has also fallen from yesterday’s highs of $1265 after a failed test of 12-month falling highs resistance at  $1267 while the US dollar rallying form 13-month lows makes the relative price of the precious metal more expensive. The greenback will continue to be closely watched by investors for a gauge of sentiment, while US political fallout this afternoon from the failed Healthcare Bill will also be of interest.

In focus today will be preliminary US Q2 GDP (1:30pm) for confirmation of resurgent stateside growth. Expectations for GDP to notch up a 2.5% print would indicate a break-out from two quarters of slowing growth, lending hope to Trump’s economic team. Expect a jubilant Trump tweet if so.

US Personal Consumption Expenditure, however, may be more closely scrutinised, along with inflation, by those watching the Fed following Wednesday’s noticeably less hawkish policy update. Expectations for Core PCE to slow markedly to 0.7% (prev 2.0%) and GDP Price Inflation of 1.3% (prev. 1.9%) could keep policymakers worried. An upside beat, however, could rekindle expectations of another hike before year-end.

Spanish CPI (8am) is forecast unchanged at 1.5% annual, but down sharply for the month (-0.8%) to a 12-month low. However Spanish GDP for Q2 is forecast up a notch to its best quarterly growth rate since Q3 2015 and best annual rate since Q3 last year. Note France’s GDP beat this morning..

Eurozone Confidence figures (10am) are seen a touch weaker in July, while German CPI (1:30pm) holds firm (0.2% monthly, 1.5% annual), albeit still shy of ECB President Draghi’s 2% target for the Eurozone.

The University of Michigan Sentiment (3pm) is expected to be confirmed lower in July at 93.1, whilst after the customary pre-meeting blackout, Fed speakers are free to be paraded out before audiences eager for more hints about the path for US monetary policy. Ultra-dove Kashkari (6:20pm) breaks the 10-day silence.

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