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

UK 100 Index called to open +5pts at 7770, still flirting with a bullish breakout beyond 3-week resistance that could open the door for a return to 7900 record high. Bulls need a break above 7785. Bears require a breach of 7755. Watch levels: Bullish 7780, Bearish 7760.

Calls for a positive open are in spite of Trump looking set to follow through with $50bn of tariffs on Chinese goods. This would add to those on metals already directed at EU/CA/MX, increasing the prospect of China retaliation and a global trade ruckus, but the threat has been in the background for several months now. GBP weakness, attributable to yesterday’s dovish ECB update, is also buoying the UK Index helping it hold yesterday’s rebound.

Mixed trading in Asia overnight mimicked a similar Wall St close, with Tech strength persisting. EUR weakness (back down at 18-month rising support vs USD), after President Draghi announced an end to QE by year-end but overpowered this with dovish guidance for no interest rate rises until Summer 2019 at the earliest, has helped send the USD Index back to May highs. This may have dented metals, but they are off lows and UK Index Miners were higher in Australia overnight.

Oil under pressure (watch UK Index Energy names) from both the aforementioned USD strength and the threat of OPEC and Russia rolling back on the coordinated production cuts that have helped prices recover to recent highs, to help make up for output losses from Iran/Venezuela etc.

In corporate news this morning Tesco Q1 like-for-like sales +1.8%, helped by Booker acquisition (+14.3%), but missed consensus (ex-Booker) of 1.9%; Tesco UK and ROI growth slower than Q4.

Rolls Royce outlines mid-term ambition; well-placed to exceed free cash flow of £1bn by 2020, even as repair costs for Trent engines rise. CRH says $3.5bn Ash Grove acquisition gets US regulatory approval. British Land has engaged Morgan Stanley and UBS for recently announced £200m buyback. SThree Q2 gross profit +11% on strength in Europe and US; reiterates 2018 guidance.

Stobart letter to shareholders highlights change from collection of emerging businesses to a more tightly focused group; requires new management style; recommends re-election of Chairman after ex-boss Tinkler tried to remove him. Sound Energy finalised specific location of approaching TE-9 exploration well which will target A1 prospect in Tendrara-Lakbir permit, Eastern Morocco.

In focus today, as follow-up to yesterday’s European Central Bank policy update (rates unchanged, but bond-buying programme to end by year end), will by May final Eurozone Consumer Price Inflation (10am).

Both the headline and core prints are expected to confirm an acceleration (1.9% vs 1.2% and 1.1%  vs 0.7%, respectively) which will be welcomed by Draghi, vindicating yesterday’s suggestion, via less QE, that the economy requires increasingly less stimulus, even if a rate rise is a long way off.

Also topical, with the recent spectre of US-EU trade war, will be the Eurozone Trade Balance (10am), projected to fall sharply in April, blunting some of Trump’s protectionism arguments.

Later in the day, focus shifts across the pond to US Empire Manufacturing (1:30pm) and Industrial/Manufacturing Production (2:15am), with all expected to fall month-on-month in a rare bout of disappointing news from the US after much strong suggestions of economic strength.

Speakers today include a few European Central Bankers (ECB), with Nowotny (9am, hawkish) presenting the Austrian Economic Outlook in Vienna, while colleague Coeure (9:45am, hawkish) speaks at an invitation-only CIO-CFO conference in Paris.

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