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

UK 100 Index called to open +5pts at 7285, retracing some of Monday’s Sterling-inspired overnight losses. Bulls need a break above 7308 Monday’s highs to regain upwards momentum; Bears require a breach of 7256 overnight lows to continue the downtrend. Watch levels: Bullish 7320, Bearish 7250.

Calls for a mildly positive open come after a Wall St snapped back from a string of losses, with US Tech sector shares helping S&P 500 close higher (though Apple remained vulnerable to Trump’s China trade threats).

US and Canada accelerated their trade talks as Canadian FM arrived in Washington DC ahead of schedule to continue negotiations (with protections for Canadian dairy farmers a sticking point). Meanwhile, Donald Trump announced plans for a second meeting with North Korea’s Kim to discuss de-nuclearisation of Korean peninsula.

UK Index remains under pressure of stronger GBP, after EU chief negotiator Barnier boosted the UK currency with comments on the possibility of reaching a Brexit deal within 6-8 weeks. That said, the timetable could still be predicated on concessions from the UK, which could be difficult to achieve in the face of Tory recalcitrance.

Oil prices are advancing as markets are digesting US sanctions on Iranian exports, as well as potential impact of Hurricane Florence on energy demand (though the storm is not expected to disrupt oil-drilling infrastructure).

In corporate news this morning Ashtead reported Q1 like-for-like rental revenue +19% YoY, EBITDA +20%, pre-tax profit +23% (consensus beat), capex +23%. Announced extension of share buyback to £125m per quarter (£675m total). Expects FY results to be ahead of expectations thanks to weaker GBP and strong market demand for rentals.

Unilever expects to complete simplification of its dual Anglo-Dutch corporate structure in December. JD Sports Fashion H1 revenue +35% YoY, EBITDA +26%, pre-tax profit +19%, dividend +4%, added 18 stores in mainland Europe and 21 stores in Asia Pacific. H2 sales so far at similar levels. Remained confident in delivering results in line with market expectations.

Anglo American announced rough diamond sales of $505m in the 7th cycle this year (-0.4% YoY, -5.3% from prev. cycle). Cairn Energy reported H1 net loss of $500.5m (though rev. increased to $182.4m from $10.8m) with production at Kraken development below expectations due to unplanned downtime.

Sanne H1 revenue +19.5% YoY, op. profit -12.1%, underlying pre-tax profit -1.5%, interim dividend +9.5%, confident in delivering FY results in line with expectations. Hilton Foods H1 revenue +24.5% thanks to volume growth and higher unit fish pricing, adj. op. profit +24.8%, adj. pre-tax profit +20.3%, interim dividend +12%, reiterated FY guidance.

In focus today will be the latest UK wages and jobs statistics, with headline July Unemployment (9:30am) expected unchanged from June’s improved 4% rate. Growth in Average Earnings is also forecast unchanged at 2.4%, although the Ex-bonus metric may have improved to 2.8% YoY (from 2.7% in June), vindicating the Bank of England’s interest rate hike early last month.

German ZEW Surveys (10am) are forecast to confirm worsening economic sentiment, with Current Conditions down a shade to 72 (from 72.6 in August) and Economic Sentiment worsening to -14 (down from -13.7). That said, ZEW sentiment for Eurozone as a whole could see improvement.

In today’s speakers, we have Swedish Riksbank’s chairman Ingves speaking twice in London, first at a Goldman Sachs panel discussing monetary policy (8:15am) and later at a conference on Financial Regulations Post Brexit organised by the London School of Economics (12:45pm). Meanwhile, ECB’s chief cop Nouy (1pm, supervisory board chair) is scheduled to speak in Strasbourg.

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