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

UK 100 Index called to open flat at 7525, having retreated from overnight highs of 7535 although remaining above Friday’s lows to remain in its 2-week 7485-7560 sideways channel. Bulls would like to see overnight highs of 7535 overcome for a return to the channel ceiling. Bears on the other hand eye Friday's lows of 7515 as a trigger towards the 7485 channel floor. Watch levels: Bullish 7535, Bearish 7515.

Calls for a flat open come after a landslide election victory for the Japanese Prime Minister Shinzo Abe, providing a fresh platform for the PM’s economic policies dubbed ‘Abenomics’, while also looking to revise the country’s post-war constitution.

Elsewhere, tensions continue to rise in the ongoing Catalonian constitutional crisis, with Spanish congress expected to vote to dismiss the leaders of the regional government as early as Thursday, while the Trump administration’s proposed tax reforms continue to gain momentum with lawmakers.

As a result of Abe’s procession to victory, Japanese equities are on course to break a 30-year old record of positive closes as the Nikkei trades a 20-year high, however sentiment is rather weak heading into the new week as other markets across the region struggle. In particular, Hong Kong’s financial sector is proving a drag on the Hang Seng, while Aussie-listed gold miners struggle after the precious metal traded a fresh 2-week low overnight.

Limited corporate news consists of Spire Healthcare rejecting a takeover bid at a 30% premium to from Tuesday’s closing price from larger rival Mediclinic; Interserve being awarded another contract, this time from the BBC, less than a week after a devastating profits warning; both AstraZeneca and GlaxoSmithKline receiving FDA approval for new drugs (diabetes and shingles, respectively), while the former also announces it has submitted a new breast cancer treatment developed alongside Merck for regulatory approval.

On Friday, US equity markets continued their recent run of record high closes, with a phenomenal turnaround from General Electric alongside strong performances from Boeing, UnitedHealth and Goldman Sachs on tax reform hopes helped the Dow Jones climb 165 points. The S&P 500 also finished at a record high thanks to tax reform-inspired Financial sector gains, while the Tech-focused Nasdaq finished 0.3% higher at a record closing high.

Crude Oil prices have extended Friday’s gains as continuing conflict in the Iraqi Kurdistan region fuels fresh concerns of disruptions to supply. This helped global benchmark Brent briefly climb to an overnight high of $58 a barrel, while US crude has retained a $52 handle.

Gold dropped to a fresh 2-week low of $1274 as the US dollar traded at its highest in a fortnight, while the victory for PM Abe in the Japanese election sees safe-haven demand retreat. The precious metal has since recovered to $1276 as the dollar rally cooled, however is struggling to break above Friday’s lows of $1278 as the greenback remains within touching distance of highs.

On a quiet Monday for data and events, in focus today will be UK CBI Trends (11am) and Eurozone Consumer Confidence (3pm). Whilst no consensus is available for the former, Orders will look to rebound from a 5-month low and Business Confidence looks for a return to January’s 2-year high, while the latter is expected to improve to a fresh 10-year high.

Although no major speakers are scheduled today, traders are likely to react the weekend’s speeches from Fed Chair Yellen and ECB President Draghi, the aftermath of the Japanese election following Shinzo Abe’s landslide victory and any Brexit commentary after a scheduled debate on the matter in parliament was postponed by the government.

US companies reporting today include Alcoa spin-off Arconic, oil services giant Halliburton and asset manager State Street.

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