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

UK 100 Index called to open -30pts at 7670 (with ex-divs taking 4.5pts off), off its overnight lows to hold rising support, but back below the mid-point of its 3-week sideways channel. Bulls need a break above 7695 overnight highs. Bears require a breach of rising lows support at 7660. Watch levels: Bullish 7695, Bearish 7660.

Calls for a negative open come after a down day on Wall St and Asian trading depressed by a hawkish Fed update (in a refreshingly plain non-academic English) and disappointing Chinese data; retail sales slowest growth in 15 years, fixed asset investment slowest since 1996, Industrial production giving up some of April’s rebound; Beware read-across to UK Index Miners sector, although RIO and BHP were higher in Australia overnight.

A slightly more hawkish Fed statement projecting a full 4 rate hikes this year and another 3 in 2019, backed by strong US economic growth and low unemployment, initially strengthened USD. However, the greenback has given up most of its gains overnight, and GBP strengthened (UK Index hindrance) as a result as concerns mount about US tariffs on Chinese goods and global trade war.

Oil prices are flat ahead of today’s meeting between Russian President Putin and Saudi Crown Prince Mohammed bin Salman on the side-lines of the World Cup opening match in Moscow, markets still uncertain whether the major crude producers will go ahead with a long-discussed end to voluntary production cuts, increasing supply which may push oil prices lower and hurt UK Index Energy.

In corporate news this morning Mylan says the US FDA will reject its generic version of GlaxoSmithKline’s blockbuster asthma drug Advair after finding “minor deficiencies”. Separately, GSK says its GEMINI 1&2 studies to control HIV met their primary end-point.

Rolls-Royce to cut 4,600 UK jobs as part of restructuring to save £400m net per-annum by end-2020. Cash cost £500m, spread 2018-20; Current trading in-line with expectations, cash flow guidance stands. Safestore 6M like-for-like revenues +5.4%, underlying EBITDA +7.6%, occupancy +5.4%, cash flow -0.4%, dividend +21.4%; guidance reiterated.

Anglo American sells 21.9% equity interest in Peruvian copper project to Mitsubishi for $600m, will retain 60% stake. Aveva reports pro-forma FY revenues +8.6% including Schneider acquisition (+15% organic), with EBIT +8.9% (+23.8% organic), in medium-term expect stronger growth thanks to ongoing digitalisation of industry.

PZ Cussons says conditions in Nigeria tightened further, full year pre-tax profit to be at bottom end of revised guidance. N Brown Q1 revenues +0.4% YoY (products -2.8%, financial services +6%); online +3%, consultation to close all 20 stores; 75% of sales now on-line (84% of new customers).

In focus today, hot on the heels of the Fed yesterday, will be the European Central Bank own  policy update (12.45pm). No rate changes expected here, not while it’s still buying  government and corporates paper. But we may get news on the timetable for ending that QE bond-buying stimulus programme. If so, it’s likely to feature in the statement and further discussed at the press conference with President Mario Draghi (1.30pm).

Closer to home, hot on the heels of yesterday’s UK CPI, is May UK Retail Sales (9.30am), expected to slow (April growth skewed by a rebound from cold March) but show an acceleration on an annual basis (2.5%), in-line with UK headline inflation.

Similarly, across the pond, consensus has May US Retail Sales (1.30pm) showing a sequential acceleration in growth that vindicates Fed Chair Powell’s praising of the US economy which he and his colleagues deem strong enough to allow two more rate hikes in 2018, and three more in 2019.

Oh, the 2018 World Cup also starts today, with hosts Russia taking on coordinated crude oil production-cut colleagues, and OPEC mouthpiece, Saudi Arabia in the opening match in Moscow.

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