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

UK 100 Index called to open flat at 7635, as the markets drew a deep breath after yesterday’s panic sell-off that extended a week-long falling channel to bring the index back to early May lows. Bulls need a break above 7755 to claw back some of yesterday’s fall. Bears require a break below 7590 to pierce through early May support and continue the downtrend. Watch levels: Bullish 7650, Bearish 7600

Calls for a flat open are supported by ongoing global sell-off that continued overnight on Wall St (Dow -1.6%, S&P500 -1.2%) and Asia as Italian political crisis rippled across the world. Investors were rushing into US Treasuries as even traditional safe havens such as gold (-0.2%) were not immune to market jitters with EUR experiencing some of its worst losses year-to-date on fears that eurosceptics might gain additional strength in fresh Italian elections. USD strengthened its status as the world’s de facto reserve currency (with corresponding GBP weakness), injecting some optimism into UK Index which benefits from a weaker Pound due to its global exposure.

Sell-off was exacerbated by fresh fears of US-China trade war as President Trump said he was moving ahead with plans to impose $50B worth of tariffs on Chinese imports despite Treasury Secretary Mnuchin announcing that the trade war was “on hold” a mere 2 weeks ago. More positive news came out of preparations to diffuse tensions on Korean peninsula as the White House was preparing a long-discussed summit between Donald Trump and Kim Jong Un to take place in Singapore, tentatively scheduled for June 12.

Oil prices were broadly flat (Brent $66.53, -0.11%) to help stench some of the bleeding in UK Index Energy stocks,

In corporate news this morning Royal Bank of Scotland announced that its CFO Ewen Stevenson has resigned following yesterday’s news that UK government is preparing to off-load its stake in the lender. AstraZeneca drug trial for Fasenra, its first respiratory biologic treatment, didn’t meet primary endpoint in Phase 3 trial. Fresnillo confirmed 2018 silver and gold production targets, rev +9.2%, profits +32% YoY.

LondonMetric Property FY results see net rental income +15.9%, dividend +5.3%, notes being “nervous” on the retail sector outlook. B&M European Value Retail pre-tax profit +25%, like-for-like revenue +4.7% YoY, final dividend +23% to 4.8p, confident in a solid quarter outcome. Telford Homes pre-tax FY profit +34% YoY, expects further increase in the current financial year, total  dividend of 17p (up from 15.7p previous year).

De La Rue full-year operating profit fall 11% from £62.8M in the year ended March 31, from £70.7M YoY, which was in line with its lowered guidance, after it spent £4M on a failed bid to print post-Brexit passports and made less profit on its paper business.

In focus today will be German economic data, including Unemployment (8:55am) and Inflation (1pm), with jobless rate projected to come in-line with previous month’s results (5.3%), while price growth is set to accelerate to its highest level since April 2017.

Also featured in the morning will be Eurozone sentiment (10am). Both consumer confidence and business climate indices are expected to fall, with business climate posting a fifth straight month of decline in a row to its lowest level since August 2017.

Later in the day focus shifts to US data (1:30pm), with the release of Q1 GDP (2nd est.), expected to be unrevised from first estimate (but down from previous quarter), while Personal Consumption is expected to post a one tenth increase on the back of firmer retail sales.

Central Bank speakers take a back seat to press conferences and events today, with major event of the day being the release of OECD Economic Forecasts (10am), a twice-yearly analysis of major economic trends for major Western economies in the upcoming 2 years.

In the evening, a Federal Reserve (8pm) board meeting is scheduled to discuss changes to the Volcker Rule that banned US investment banks from engaging in proprietary trading (speculating using banks’ own accounts), with the goal of easing some restrictions.

Among US companies reporting quarterly results today are cloud content management service Box, retailer Dick’s Sporting Goods and luxury watchmaker Movado.

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