Markets Overview:

UK 100 called to open +30pts at 7449, extending yesterday’s bounce from post-Christmas rising support at 7400. Bulls need a break above recent 7455 resistance to escape a 4-day sideways channel and challenge 7500. Bears require a breach of 7435 overnight lows for another test of the 7400 zone. Watch levels: Bullish 7460, Bearish 7430

Calls for a bullish open come amidst a low volume Asia Session due to a week-long holiday in Japan; Australia’s ASX higher thanks to bank sector results. US markets hit fresh highs overnight and Apple upped guidance. A new round of US-China trade talks (Trump softening?) is adding optimism to hopes of an ending to the trade war.

Gold stays above yearly support at $1279 as investors look towards rising equities and strong dollar. Crude Oil retreats towards $72 dollars as fears of Venezuelan unrest ease and US inventories rise. GBP/USD holding at $1.303 as UK Nationwide House Price growth accelerates to 0.9% YoY.

In corporate news this morning:

Lloyds revised capital guidance cuts Core Tier 1 guidance from around 13% to around 12.5%.

Persimmon new-build housing market resilient, but sales hit by customer service initiatives Jan-Apr visits/conversion/cancellations in-line. Forward sales -3.5% YoY, active outlets -6.7%, weekly private sales -5%, average sale price +0.6%; Expects FY build costs +4%; flat H1 completions.

Next Q1 sales +4.0% (excl. interest) beats 3.3% consensus and 3.2% guidance (Retail -3.6% beats -6.2% consensus; Online +11.8% shy of 12.8% consensus). Q1 boosted by warm Easter and better, cannot be extrapolated; too early to revise full year guidance.

Sainsbury FY Sales ex-VAT inc. fuel (+1.9%, -0.2% like-for-like ex-fuel), in-line; underlying pre-tax £635m (+7.8%) vs £624m est; retail free cash flow +6.7%; final div +11.3%, net debt £1.64B -11.9%, targets £600m reduction over three years. Accelerating investment in stores and digital; Retail market highly competitive, very promotional, consumer outlook continues to be uncertain.

Gambia says it signed and oil and gas exploration deal with BP, according to Reuters.

Provident Financial says NSF announcement falls far short of providing satisfactory responses to shareholders and yet again demonstrates a disregard for Provident shareholder value.

Spirent Communications says positive momentum carried into Q1. Trading in-line. Pipeline robust with solid growth. As usual expects H2 weighted, with Q4 up-tick.

IWG revenues +10.6% at constant FX (open centres +15.1%), all regions contributing, improved occupancy. Wants to accelerate growth.

In focus today:

Could UK Mortgage statistics (9.30am)  be supportive of UK Index housebuilders. Keep an eye out for UK PMI Manufacturing (9.30am), expected  to pullback from a rebound. Normalisation? Could a GBP move impact the UK Index ?

Will US PMI and ISM Manufacturing (2.45/3pm) remain strong? Will Pricing, New Orders and Jobs components be the devil in the detail. Will more USD strength temper GDP and help the UK Index ?

ADP employment (1.30pm) data is expected to rebound to previous trend after disappointing March numbers ahead of Friday’s Non-Farm Payrolls.

Stronger than expected US growth and weak inflation are expected to leave the Federal Reserve (7pm) content with holding interest rates steady.

Soundbites from US-China Trade talks could keep markets lively.

Quarterly results season continues with Hilton, CVS, Qualcomm and Royal Caribbean Cruises reporting.

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