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

UK 100 Index called to open -20pts at 7855, in retreat from yesterday’s fresh 7900 record peak. It nonetheless remains within its 8-week rising channel towards 8000, with support from yesterday's  7847 lows. Bulls need a break above 7875 overnight highs; Bears require a breach of 7847 overnight lows, then 7830 rising support. Watch levels: Bullish 7875, Bearish 7847

Calls for a negative open derive from Asian bourses following Wall St lower (Energy and Industrials the biggest laggards) as the vagaries of US-China trade talks turned once again, President Trump saying he was not happy with how the talks were proceeding. To make matters worse, he added to the pessimism by suggesting delays to the 12 June US-NK summit in Singapore.

Italy is being rocked by political uncertainty, with the candidacy of relatively unknown PM candidate Conte in question over reported irregularities on his CV. Brexit talks continue for a second day in Brussels, with EU finance ministers set to meet Friday to discuss UK/EU customs future.

Oil prices are in retreat once again (Brent -1.6%) in spite of API data showing a draw in crude stocks following last week’s surprise build. This may put pressure on UK Index Energy shares (13% of index) in spite of weaker GBP (normally beneficial to the internationally-exposed index). Gold flat, even as USD strengthens ahead of FOMC minutes release, supported by geopolitical uncertainty and safe haven seeking in non-fiat homes.

Italy is being rocked by political uncertainty, with the candidacy of relatively unknown PM candidate Conte in question over reported irregularities on his CV. Brexit talks continue for a second day in Brussels, with EU finance ministers set to meet Friday to discuss UK/EU customs future.

In corporate news this morning, the FT reports that Barclays has quietly considered merger with the likes of Standard Chartered (shares +4% in HK overnight), Deutsche Bank and Credit Suisse as a contingency plan response to pressure from activist investors.

Marks & Spencer Q4 like-for-like sales growth disappoint, full year profits fall, but at top end of consensus range, final dividend unchanged, sees 2019 costs lower, Food margins down, Clothing & Home up. Severn Trent FY 2018 pre-tax profits -8%, underlying +4%, inline, final div +6.2%. Vedanta Resources revenue +33% (beat), EBITDA +27%, Final div +17%.

Bovis Homes says market fundamentals remain strong; Total sales for the year in line with expectations and pricing strong, good progress on margin initiatives, final dividend +8.3%

Babcock International FY 2018 pre-tax profits +8%, debt -5%, £31bn secured orders, expects underlying revenue growth (low mid-single digit organic; broadly stable margins). Dairy Crest to raise £69.9m in 7.7% discounted share placing to fund cheese expansion, final div unchanged.

St. James's Place says Chair Sarah Bates to retire after 4yrs years, replaced by senior independent director Ian Cornish. Great Portland Estates FY portfolio valuation +2.9% (NAV +5.8%); yield -10bp, final dividend +14.1%; Rental value growth guidance +1.0% to -2.5%; expect and planning for continued economic uncertainty, but occupier demand remains healthy in retail/offices.

In focus today will be will be UK April Inflation (9:30am). While the headline figure is seen unchanged at 2.5% YoY, the more meaningful Core measure (excluding volatile goods like fuel, grub, booze ‘n’ fags) is expected to have slowed further (from 2.3% to 2.2%), to its lowest in a year and, of course, closer to the BoE’s 2% target. The inflation data could move GBP and thus the UK 100 index, while House price data could influence UK Index housebuilders.

Elsewhere, Flash estimates for May PMI Manufacturing and Services (8-9am Eurozone, 2:45pm US) may help in with gauging Q2 economic growth in the respective economies. With Eurozone figures forecasted to show a slight contraction, while the US figures tick higher, EUR could find itself under additional pressure vs USD.

After last night’s API data reported a draw in US Crude Oil inventories, albeit slightly below expectations, oil and Energy sector traders will be watchful of this afternoon’s EIA report (3:30pm) with both crude and gasoline stocks expected lower for a second consecutive week, which could help keep oil prices around 3.5yr highs.

This evening, detailed minutes will be released from the US Federal Reserve’s 2 May FOMC meeting (7:15pm). As per usual, economists will scrutinise the language used in discussing growth and inflation, trying to gain further insight and decipher the prospects and timing of future US rate hikes (next one expected at June 13 meeting).

Speakers today include ECB Supervisory Board member Angeloni (10am) participating on a panel at the 2018 Institute of International Finance SPring meeting in Brussels and the Fed’s Kashkari (7:15pm, dovish, non-voter) who participated in a moderated Q&A session on “New Energy Economic Reality.”

Major US retailers continue reporting Q1 earnings, with results from L Brands, Lowe’s, Target and Tiffany & Co coming in on Wednesday.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.