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

UK 100 Index called to open +15pts at 7675 to extend yesterday’s strong late rally. The Index is nonetheless off overnight highs, back from the 7710 ceiling of a 7-week rising channel, in a very narrow 7670-7685 range since. Bulls need a break above 7690 for another challenge on the channel ceiling. Bears need a breach of 7670 overnight lows. Watch levels: Bullish 7690, Bearish 7670

Calls for a positive open  come after gains on Wall St and in Asia overnight, Energy names still supported by oil trading fresh 3.5-year highs amid continued Middle East tensions (Israel/Iran/Syria), fallout from Trump quitting the Iran nuclear deal and inventory drawdowns across the board in yesterday's EIA data.

China April inflation was mixed overnight with Consumer Prices (CPI) slowing more than expected (1.8% YoY vs 1.9% est.) but Producer Prices (PPI) not slowing quite as much. UK Index Miners may have trouble digesting this morning, although they may like a USD off its highs to help commodity prices. That said, GBP off its lows may be an index hindrance ahead of the BoE’s midday update.

In corporate news this morning, RBS $4.9bn settlement with US Department of Justice (DoJ) for pre-crisis mis-selling of mortgage-backed-securities (MBS) clears path to government selling down its 71% bailout stake. Extra $1.4bn provision necessary in Q2. BT aiming for £1.5bn costs cuts over three years (cut 13,000 back/middle office, hire 6,000 network support/customer service). Pension deficit rises to £11.3bn in latest triennial review.

Barratt Developments trading strong and FY outlook remains in-line with expectations; forward sales +2.5%; market fundamentals supportive. Housebuilders may also be sensitive to RICS house price data showing prices down slightly in APril, but the worst for London for nearly 10 years.

Morrisons Q1 group like-for-like sales ex-fuel +3.6% beats 2.7% consensus (range 1.8%-3.4%) thanks to Retail (+1.8% vs +1.6% est) and Wholesale (1.8% vs 1.3% est). Inflation broadly flat, volume growth accelerated; FY guidance unchanged. Next Q1 pretax profit +1.7% with total brand sales +6% vs 2.7% est; Retail sales better than expected, online +18%.

ITV Q1 as expected, H1 advertising profits expected +2% reflecting World Cup timing; on track for good FY organic revenue growth in ITV Studios, double-digit Online. Melrose Industries

Randgold Resources 2018 FY production guidance intact even after a difficult Q1 in which it reported lower gold production, sales, profits and cash flow, and higher costs. RSA Insurance Q1 pre-tax profit for up YoY, although lower on an underlying basis due to elevated winter weather costs not being fully offset by other improvements.

In focus today will be the Bank of England’s (BoE) “Super Thursday” where we get the quartet of; 1)  interest rate decision (hike no longer expected after poor economic data); 2) Quarterly Inflation Report (is inflation seen continuing to ease as fast?); 3) Meeting Minutes (has voting shifted from the previous 7-2 against a hike?); and, lastly, 4) latest economic projections (how have these changed after weak Q1 GDP and other data disappointments?).

Before this, however, UK Manufacturing & Industrial Production (9.30am) growth is forecast faster in March, but after several weather-impacted data points note potential for a downside surprise, something economists expect to see in Construction Output (-5.7% est vs -3% prior).

Later in the day US Consumer Price Inflation and Wages growth (1:30pm) has read-across to the Fed’s June rate decision with Core CPI est +2.2% YoY vs. 2.1% prev. bolstering hike expectations.

Among US companies reporting results will be technology companies NVIDIA, cyber-security name Symantec and payment processor Worldpay.

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