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

UK 100 Index called to open flat at 7488, still in this week’s falling channel from 7700, and now firmly below 7500. Bulls need a break above falling highs resistance at 7510 to escape said channel for a rebound towards 7600. Bears are eyeing up any further troubling of 7475 overnight lows to extend the channel towards mid-Dec lows of 7434. Watch levels: Bullish 7510, Bearish 7475

Calls for a flat start stem from a mixed close on Wall St that has been echoed by Asia overnight as bond yields (US 10-yr bonds at fresh 4yr high) continue to rise (prices fall), the USD remains under pressure to keep GBP/EUR/JPY strong, and investors dial back on risk ahead of this afternoon's US January Jobs report.

Asia saw weakness in the Tech sector overnight after Apple announced less iPhone sales than expected, although financial results beat expectations and Alibaba margins were cause for concern. Financials higher in Australia thanks to higher bond yields (can charge more to lend), while USD weakness helped deliver a tick-up in oil prices and Metals to boost Energy and Materials, all three being important sectors for the UK Index .

Corporate news this morning: UK Index Banks may react to a bigger than expected loss for Germany’s Deutsche Bank while Healthcare may be sensitive to AstraZeneca posting lower 2017 revenues on slower product sales. BT 3Q pre-tax profits may have risen, but just shy of consensus expectations.

National Grid expects $2bn tax credit from US tax reform. Vedanta Resources says 3Q revenues and Ebitda both rise. Provident Financial has appointed Malcolm Le May permanent CEO; starts search for Chairman. Cobham sells two testing businesses for $455m, will pay down debt.

US equity markets closed mixed as results from UPS (global economic barometer), Paypal and Alibaba all disappointed, countering some decent US macroeconomic data prints.

Crude Oil benchmarks have ticked back closer to recent multi-year highs, amid optimism that compliance with OPEC/NOPEC production cuts offsets worries about ever rising US shale/fracking production. Brent back above $70, US Crude at $66/barrel.

Gold likes a US Dollar still under pressure, helping the safehaven challenge recent $1350 highs overnight. That said, a break-out, to open the door to recent $1366 highs, has yet to prove itself.

In focus today will be the US Jobs Report (1:30pm) with its all-important Non-Farm Payrolls, Unemployment rate (no change expected) and Average Earnings figures.

Wednesday’s ADP jobs report beat to the upside (235K jobs additions vs 180K est). This offers potential for NFP to get back above 200K, rather than merely bouncing from Dec’s 148K to hit 180K, getting back above the 2017 171K average.

However, Average Earnings may be the focus (again), especially if growth comes in hotter than consensus (2.5% est vs 2.6% prev), which could heighten expectations that the US Fed will raise rates more quickly, given the data’s inflationary read-across from wage to pricing pressure.

The other major data release of note today is Eurozone PPI (10am), seen cooling in December (2.3% est vs 2.8% perv) which could dent recent European Central Bank (ECB) hawkishness, although Consumer Price inflation (especially Core) remains well shy of the 2% target.

The ECB’s Cœuré (10am) speaks at a conference on “Deepening of EMU” followed by a panel discussion in Slovenia. This evening the Fed’s Kaplan (6.30pm) participates in a moderated Q&A at the Teacher Retirement System of Texas Annual Conference with audience and media Q&A colleague Williams (8.30pm) deliver the keynote address to the "Financial Women of San Francisco", with audience Q&A.

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