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

UK 100 Index called to open -50pts at 7230, having extended its retreat from a bullish attempt to conquer 7300 yesterday. That said, shallow rising support remains intact at 7225. Bulls need a break above the 7245 highs of the last hour, while Bears need a breach of 7225, if not 7200. Watch levels: Bullish 7245, Bearish 7225

Calls for a sharply negative start follow on from a lower US close echoed by Asian bourses overnight. A hawkish Jay Powell indicated US interest rates set to continue to rise in his first public outing as Federal Reserve Chair, prompting many to expect four rate hikes this year rather than three. While the US dollar initially spiked to a 2-week high, the global reserve currency is now retreating from highs.

Add to this lower China PMI Manufacturing (and Indian) data overnight, further hampering metals and oil, and some UK data disappointments (GFK Consumer Confidence, Lloyds Business Barometer, BRC Shop Price deflation), means sentiment kept in check overnight with Miners trading lower in Australia.

Corporate news this morning: ITV FY Revenues +4% (Broadcast & Online -3%, Studios +13%), EBITDA -5% (Broadcast & Online -7%, Studio flat), dividend +8% but with ordinary div back to normal,  no special dividend. St James’s Place operating profits +36%, AUM +40%, final dividend +33%, maintain 15-20% medium term business growth objective. Admiral PBT +43% (+4% pre-Ogden impact), Net Revenues & UK Customers +11%, final div +12.6%.

Taylor Wimpey FY revenues +7.9%, pre-tax profit before exceptionals +10.7%, net profit -5.8%, completions 4.6%, average selling price +3.5%, 47% forward sold but order book flat; confirms £500m dividend. Whitbread announces significant acquisition of 19 hotel portfolio in Germany. Travis Perkins back to profit in second half, dividend +2.2%, mixed backdrop for 2018. Man Group funds under management +35%, revenues +33%, adj. PBT +87%, final dividend +15.4%.

US equity markets closed moderately lower yesterday as new Fed Chair Powell signalled that the central bank would continue to raise interest rates to contain inflation. The Dow Jones closed 1.2% lower (-299pts) led lower by Disney after Comcast’s rival bid for Sky, while real estate, non-essential goods and telecoms sectors weighed on the S&P 500 as the blue-chip index dropped 1.3%. The Tech-heavy Nasdaq retreated 1.2% as FAANG stocks fell.

Gold is sharply lower overnight as the US dollar spiked following new Fed Chair Powell’s first day of his bi-annual testimony to Congress. The precious metal, a non-yielding asset seen as an alternative to investors during periods of low interest rates, suffered as the central bank chief suggested interest rates would continue to rise. Having fallen to an overnight low of $1313.5, the precious metal is testing emergent overnight resistance at $1319.

Crude Oil benchmarks are lower overnight as a stronger US dollar and a larger than expected build in US inventories reported by API add to bearish sentiment. API reported a 2.1m barrel build, over twice as large as the 933k expected, seeing global benchmark Brent fall to intersecting support at $66.2, although is now recovering as the US dollar retreats from highs, while US crude is recovering from overnight lows of $62.6.

In focus this morning will be flash Eurozone Consumer Price Inflation for February (CPI; 10am) which is forecast to show slower Headline growth but stability for Core, albeit both still well below target of at or just below 2%. And major deviation could move the EUR, and thus the DAX.

This afternoon, the second estimate for Q4 US GDP (1.30pm) is likely to show it having slowed, albeit with Price growth accelerating and Personal Consumption still strong, adding weight to the possibility that the Fed needs to hike rates further/quicker  to tame inflation back to its 2% target.

US Pending Home Sales (3pm) are forecast having grown more slowing in Jan, while US Oil inventories (3.30pm) will be of interest after a smaller than expected API build for Crude last night, a bigger build for Gasoline and a bigger drawdown for Distillates.

Later today, the European Commission will publish a 120-page draft of the UK-EU withdrawal treaty. The text, expected to include contentious outlines for issues such as the Northern Irish border and ECJ jurisdiction, will pile the pressure on UK PM Theresa May ahead of her key Brexit speech on Friday from which, given the time elapsed, both markets and Brussels demand clarity,

Following International Trade Minister Fox’s Brexit speech yesterday, today, a retort comes from former Permanent Secretary for International Trade Donnelly (2016-17), who only yesterday suggested that Brexit amounted to ‘a packet of crisps’ compared to the current ‘three course meal’.

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