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

UK 100 Index called to open +30pts at 7635, holding an overnight break above 7630 which got as high as 7650 overnight and opens the door for a revisit of June 7705 highs and May falling highs at 7670. Bulls need a break above 7650 overnight highs. Bears require a breach of rising support at 7620. Watch levels: Bullish 7650, Bearish 7620

Calls for a positive open come after a positive post-holiday close on Wall St and overnight gains in Asia, suggesting that the imposition of the first batch of US-China trade tariffs has already been priced in. Sentiment may be off its best (China teasing markets by delaying reciprocation, declaring US fired first shots), but even the threat of Trump going as far as $500bn in import duties to penalise China has failed to derail markets. Watch for headlines from China

GBP is up off its worst levels stronger to hamper the UK Index as the USD remains under pressure following Fed minutes which highlighted the risk of a trade war and Yen stronger on a bit of safehaven seeking (Gold rangebound). Copper staged a rebound on weaker dollar, but Oil prices largely flat. Watch UK Index Miners this morning, sensitive to both GBP and commodity prices

In corporate news this morning, Rolls-Royce to sell commercial marine business to Kongsberg; net proceeds £350-400m for balance sheet resilience and extra capital for growth opportunities.  Inmarsat rejects improved 532p offer (46% prem.; 265p cash, 0.0777 new shares; £2.45bn) from Echostar who seeks to remain engaged and requests takeover panel extension of today’s deadline.

BHP and workers at Chilean copper mine Escondia far from agreement. BCA Marketplace says Apax does not intend to make an offer. Stobart says CFO stepping down; “started the year trading satisfactorily”, on-track for medium term objectives. Virgin Money expects Common Equity Tier 1 ratio +250bp to approximately 16%; PRA approves improvements to mortgage risk-weight models.

In focus today will be the US Jobs Report (1.30pm), a.k.a. Non-Farm Payrolls, for its read-across to US economic growth, US inflation, US interest rate policy and thus the USD, which has an impact on GBP, commodities and, of course, the many internationally exposed UK Index names.

Economists forecast slightly less NFP job additions in June, albeit still around the 200K/month average. Unemployment is also seen holding a near 50yr low and, perhaps more importantly, Hourly Wages rising 2.8% YoY, in-line with US inflation (Headline + Core), justifying Fed rate rises.

Thereafter, we have the build up to UK PM May’s weekend showdown with her Cabinet on Brexit and what kind of a final trade/customs setup will be proposed to Brussels for next March.

Other data of importance includes May UK Halifax House Prices (8.30am) which could move UK Index Housebuilders. Consensus expects a slowdown both monthly and annually (1.8% YoY vs 1.9% prev.), albeit much more pronounced for the former (0.3% MoM vs 1.8% prev.). UK Q1 Labour Costs ( 9.30am) could also move GBP given its potential inflationary implications.

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