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

UK 100 called to open -50pts at 6970, at the lower end of a 5-week narrowing pattern (floor 6925, ceiling 7140). Off its worst levels, Bulls need a break above 6975 overnight highs to extend the bounce. Bears require a breach of 6950 for another test of shallow rising support at 6925. Watch levels: Bullish 6975, Bearish 6950

Calls for a negative open come Wall St markets retreated sharply (all down 3%+) as investor (and algos?) sentiment soured on uncertainty about the US-China trade truce and a flattening/inversion of the US Treasury bond yield curve gave rise to more worries about the strength of the US economy, a harbinger of recession going all the way back to the Second World War.

Asia followed the US lower in spite of positive China Services PMI (Caixin) data which improved slightly and edging away from the breakeven level that manufacturing began flirting with last week. GBP is weaker on Brexit worries after yesterday’s dramatic government defeats in Parliament, though Sterling weakness is insufficient to help the UK Index in the face of a global equity sell-off.

Oil prices lower after US API Oil inventories reported a surprise 5.36m barrel build overnight (consensus was for a 2.3m drawdown), to make it 11 straight weeks of rising stockpiles.

In corporate news this morning Takeda shareholders approve $62bn takeover of Shire, the biggest ever overseas acquisition by a Japanese company. Moody's cuts Thomas Cook's ratings to B2; outlook Negative.  

The UK Index Quarterly Review is likely to see Royal Mail auto-relegated from UK 100 , replaced by Hiscox which is auto-promoted. With Spirax-Sarco also in-line for auto-promotion, index rebalancing is likely to mean JustEat gets the boot as next biggest UK 100 member.

Regulator Civil Aviation Authority is taking legal action against Ryanair for refusal to compensate UK-based customers over strike disruptions (Ryanair claims “extraordinary circumstances”). Ryanair terminated agreement with AviationADR dispute-resolution body. John Wood awarded $43m contract to build natural gas liquids pipeline in Texas.

HSBC issues €2.25bn senior unsecured notes in 2 tranches (€1bn floating due 2021 and €1.2.5bn 1.50% fixed-to-floating due 2024). Tritax Big Box to sell £400m of bonds, average 2.91% coupon average 9.8yrs, to refinance debt and fund potential M&A.

William Hill pre-purchases 5.3% stake in Swedish online gambling group Mr Green as part of takeover offer. As part of BTG takeover by Boston Scientific, Woodford sells 1m shares.

Stagecoach H1 adj. profits decline (statutory loss) beats guidance after better rail profits; H2/FY guidance upgraded; interim dividend flat; competitive challenges in some UK and North America markets. Review of North American division includes discussions about possible part/full sale

Faroe Petroleum agrees to swap assets with Equinor Energy in Njord and Bauge developments in return for 4 assets on the Norwegian continental shelf. Deal adds 7-8K boepd to Faroe production, reduces CapEx and OpEx per oil barrel. Commenced Cassidy oil well exploration in the North Sea.

The focus today will be Prime Minister’s Questions (12pm), followed by the second day of the Brexit debate in the House of Commons. After yesterday’s unprecedented votes to find the government in contempt of Parliament, force the publication of the full Brexit legal advice and give the Commons more say over a “Plan B”, does the PM find herself without a governing majority to push through next week’s Brexit vote? Will Parliament take back control?

The BoE publishes 20 Nov Financial Policy Committee meeting minutes (8:30am) as well as its final full assessment of the UK banks and the financial system health ahead of Brexit.

In terms of macro data, look to November PMI Services from the Eurozone (8:45-9am), all expected to confirm weaker preliminary numbers, the UK (9:30pm), rebounding from October 7-month lows, and the US (2:45pm), confirming a services slowdown.

Also from the US - despite it being a day of mourning with stock markets closed to mark the passing of President George Bush Senior - pay attention to ADP Employment (1:15pm) as a potential preview for Friday’s Non-Farm Payrolls, with economists expecting a pullback to 195K from a strong 227K last month.

A for speakers, ECB President Draghi (8:30am) delivers a speech on “Promoting safe and sound banks in the SSM” at an ECB colloquium. Colleagues Nouy (9:45am) and Lautenschläger (10:15am) speak on banking supervision at the same event. In the afternoon, the Fed’s Quarles (1:15pm) delivers a speech on banking conditions at Stanford.

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