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

UK 100 called to open -30pts at 6705, but up off overnight lows 6675. Intersecting support since 28 Dec and horizontal resistance at 6760 means a bullish narrowing range. Bulls need a break above 6715, to extend the bounce towards recent highs. Bears require a breach of 6685 (if not 6675) to break support for another test of yesterday’s lows. Watch levels: Bullish 6715, Bearish 6685

Calls for a negative open come in spite of a mildly positive Wall St close and after most Asian markets suffered steep losses following a rare revenue guidance cut from Apple (shares -8% aftermarket). Note Japan still closed for holidays and Australia’s ASX offering a lone ray of positivity.

Apple’s overnight sales warning specifically pointed to China contributing most of the expected shortfall for iPhones, Macs and iPads. This adds fuel to the fire of concerns about slowing global growth and/or a trade war, and compounds this week’s China PMI Manufacturing misses. After Tesla announced price cuts, that’s two New Year kicks for the Tech sector which has resumed its October and December sell-off.

Automated algo rotation into safe-haven of Japanese Yen, made worse by low post-holiday Asian volumes, led to a flash crash in most of the main currencies (USD, EUR, GBP). Although the Pound is now off its worst levels, weakness is helping the UK Index cushion yesterday’s Tech blow.

Note Gold at $1292 has extended its bullish reversal from 2018 lows of $1160, helped by safehaven seeking which boosted demand for both the metal and the Yen, the latter pushing the Dollar lower to provide further help by making the metal cheaper for non-dollar buyers.

In corporate news this morning Next has trimmed FY profits guidance (£723m vs £727m prev.) due to heavy discounting and higher costs. Xmas sales beat consensus (+1% YoY [ex-new space and finance income) vs +0.5%), but only because online (+15.2%) more than offset the struggling Retail (-9.2%).

A less drastic cut to profits perhaps, but the direction of travel is clear, and 2020 guidance for profits -1.1% on full price sales +1.7% (barely half the 3.2% expected for 2019), with Retail -8.5% and Online slowing to 11% may well disappoint. One silver lining is expectations of £300m surplus cash for share buybacks.

Ryanair Dec passengers +12% YoY but (-1% MoM, load factor -1pts to 95%). Wizz Air Dec passengers +19.6% YoY, capacity +18.4%, load factor +1pts to 92.4%. Expanded routes and fleet.

DNO extends 152p cash offer for Faroe Petroleum to 12 Dec after receiving acceptances from 13.1% of Faroe shareholders (DNO current stake 43%). Rockhopper focus remains on putting financing together for Sea Lion to unlock project in 20149; arbitration on-track for Ombrina Mare with hearing in around a month.

Ashtead extends credit facility to Dec 2023 and increases it to $4.1bn. Credit pricing amended from LIBOR+150bp to a range of LIBOR+125-175bp (based on availability and leverage). Vectura expects revenue in line with, and EBITDA materially above, current market consensus expectations.

WANdisco secures inaugural multi-cloud contract, worth at least $565K, with one of the world’s largest mobile network operator. Costain sees FY results in line with expectations.

In focus today will be the fallout from Apple’s overnight sales warning which has stoked the fires of concerns about slowing global growth, China in particular, and especially after this week’s PMI disappointments.

Given the travails of the UK Retail sector, the Christmas Trading Update from Next will also be closely watched, with read-across for many a UK Index domestic consumer-exposed names.

Data of note today includes UK PMI Construction (9.30am), forecast lower in December. Manufacturing did surprise to the upside yesterday, although this has been attributed by some to pre-Brexit stockpiling given the risk of a no-deal departure from the EU.

From the US, the ADP Jobs (12.30pm) report is expected unchanged from November’s 179K near 2018 lows. This is important ahead of tomorrow’s US Non-Farm Payrolls which are forecast still solid,  mid-way between November’s 155K and their 200K 4-month average.

After yesterday’s solid US PMI Manufacturing (53.9), watch US ISM Manufacturing (3pm) and its components (New Orders, Jobs, Prices). All are predicted strong (>58) vs. Europe and China, however, the headline may reverse November’s jump, retreating to just above 2018’s 57.3 low.

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