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

UK 100 Index called to open flat at 7859, within a new 2-day rising channel that sits in the middle of the longer term 8-week corridor which already ushered the index to new record highs. Bulls need a break above the 7875 highs of yesterday. Bears require a breach of 2-day rising support and overnight lows; 7845/7850. Watch levels: Bullish 7875, Bearish 7745

Calls for a flat open are in spite of gains on Wall St after US and Chinese trade delegations signalled compromise over trade issues. Asian equities lower overnight, however, as investors continue to flee emerging markets amid painful USD strengthening (watch UK Index Miners). This is offset to some extent by the White House reporting the Trump-Kim summit still scheduled for 12 June.

Dollar strength and Brexit-precipitated UK government infighting (potential for snap election if differences not resolved) adding to GBP weakness, giving UK Index buoyancy. Brent crude oil prices back off lows, to support Energy names, helped by USD off highs and sanctions on Venezuela after its re-election of Maduro. Gold pulled back on USD strength and absence of safe haven demand.

In corporate news this morning, Galliford Try outlook unchanged, in-line with consensus, average net debt below guidance; weather delays to increase exceptional charge on Aberdeen Western Peripheral project. Close Brothers Q3 loan book +2.4%, net interest margin close to the 8.1% of previous year, AUM +2%.

Cranswick FY revenues +17.6% (+12.7% like-for-like), exports +30.2%, adj. pre-tax profits +22.4%, dividend +21.8%; record capex, trading in-line but to be H2 weighted. Balfour Beatty says trading in line  with full year expectations, to achieve industry standard margins in H2, and no change to cash outflow after completion of Aberdeen Western Peripheral road project.

Pets At Home FY profits +5.6% to £130.5m beats, revenues +7.8%, just ahead. Targets Retail and Vet revenues growth ahead of market and transition back to low single digit profit growth. Halfords FY revenues and pre-tax profit bang inline, adjusted EBITDA upper end of range, but with no cycle price rises, phasing out of FX hedging, and accelerated investment, expects profits flat in 2019.

Anglo American De Beers sold $550m (+5.4%) of diamonds in fourth cycle of 2018. Serica Energy highlights Iran’s 50% interest in North Sea Rhum field (acquired from BP, affected by US sanctions. Rank Group buy QSB Gaming, owner of Spain’s YoBingo for up to €52m.

Greencore H1 profits -74%, adjusted operating profits +7.9%, margins -70bp; reiterates FY guidance, anticipates good organic growth in seasonally more significant H2. Entertainment One full year revenues -4%, underlying profits +11% (upper end of consensus), operating cash -56% after investment +8%; outlook is for lower margins.

Homeserve full year revenues +15% (miss), adj. operating profit +29% (beats), total dividend +25%, customers +7%, sees good growth prospects in 2019. NEX full year revenues +9%, operating profit -3%, expects to make progress on delivering growth objectives this year.

In focus today will be the next round of Brexit talks in Brussels, something which may keep GBP on edge, with a knock-on for the UK’s blue-chip UK 100 index.

In terms of data, UK Public Sector Net Borrowing (9:30am) for April is expected to fall back to a deficit following three months in surplus, although this echoes the seasonality of last year. Consensus for CBI Industrial Orders (11am) expects a pullback to the lowest since October 2017.

This afternoon’s US Richmond Fed Manufacturing Index (3pm) for May is forecast to recover from April’s first contraction since September 2016, but it would still be the lowest read since May 2017.

Oil watchers (UK Index 13% Energy; 25% natural resources) await the latest private API Crude Oil inventories (American Petroleum Institute; 9:30pm) for hints about Wednesday’s official EIA inventory data. Potential impetus for oil prices overnight.

Central Bank speakers today include BoE Governor Carney (centrist) and colleagues Ramsden (dovish), Vlieghe (moderately hawkish) and Saunders (strongly hawkish) testifying before the UK Parliament’s Treasury Select Committee about the May Inflation Report (9:15am). The ECB’s Liikanen (hawkish) also speaks about government debt securities (10am).

A handful of US corporates report quarterly results today, including Hewlett Packard Enterprises, Advance Auto Parts, Autozone, Kohl’s and TJX.

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