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

UK 100 Index called to open -14pts at 7502, having given up more ground, albeit well off fresh 4-month lows of 7461 trade overnight. Bulls need a break above 7530 to overcome 2-week  intersecting resistance. Bears require a breach of overnight rising support at 7490. Watch levels: Bullish 7530, Bearish 7490

Calls for a negative open derive from a downbeat session on Wall St that enveloped Asian markets overnight, putting markets in a decidedly risk-off mood into the weekend.

Negativity sentiment stems from reports that President Trump is mulling tariffs on another $200bn of Chinese imports. He also threatened to abandon the WTO, rejecting an EU olive branch on auto tariffs (zero) while new-NAFTA trade negotiations with Canada remain deadlocked. Emerging market currencies also remain under significant pressure.

In terms of sectors that could react to overnight data Miners may benefit from better than expected China PMIs, with both Manufacturing and non-Manufacturing improving in August, picking back up from recent lows. Metals prices off lows thanks to a weaker USD may also provide a boost. GBP strength remains a bugbear, but has at least pulled back from yesterday’s best.

Housebuilders could also be sensitive to this morning’s surprise drop in August Nationwide House Prices while both Housebuilders and Retailers could be swayed by improved GFK Consumer Confidence in August (less negative) although the Lloyds Business Barometer did fall.

In corporate news this morning, Whitbread to sell Costa for £3.9bn (net cash) to Coca-Cola; to return significant majority of proceeds, cut debt and provide headroom for Premier Inn expansion in UK and Germany. Subject to shareholder approval; completion possible H1 2019.

Sage CEO to step down; CFO to take additional role of interim COO; trading in line with previous FY guidance (revenues +7% organic, 27.5% organic op margin), but achievement still dependent on closing a number of Enterprise Management opportunities  in Sept;

Vodafone completes merger of Indian subsidiary and Idea Cellular (to be renamed Vodafone Idea), creating India’s largest telecoms operator with 408m customers, €7.1bn revenues and €1.4bn EBITDA in last 12 months; expects cost and capex synergies of €1.7bn.

BHP Billiton’s CFO says BHP is calm, underlying business going well, bullish on China; Shale sale on-track, cash to be returned by year-end; productivity gains should underpin dividend growth; plans to keep conservative strong balance sheet which suggests no big M&A on the horizon.

AstraZeneca says Phase III trial for Anifrolumab treatment for lupus erythematosus unsuccessful. Old Mutual (ex-Quilter) H1 gross insurance premium revenues +13% YoY, total revenues -11%, AUM +2%, FY outlook reiterated. Shire has completed the sale of its Oncology franchise to Servier SAS. for $2.4bn, to help Shire reduce leverage; updated group guidance in Q3 results later this year.

In focus today will be flash Eurozone Consumer Price Inflation (10am) forecast to show headline inflation unchanged at 2.1%, but the more problematic core metric (excluding volatile things like food, energy) stuck at just over half that, still well below the European Central Bank’s at-or-just-below-2% target.

Across the pond, this afternoon Chicago PMI (2:45pm) is expected to have eased slightly from July’s highs, though still holding above the summer average. US sentiment indicators are, likewise, expected weaker in August, with the University of Michigan Consumer Sentiment (3pm)  index seen confirming a pullback to its lowest since Sep last year.

To close the week, ECB Vice President De Guindos (6:30pm) delivers closing remarks “The euro area: current status and challenges ahead” at the Cursos de La Granda, Spain.

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