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

UK 100 called to open +10pts at 6795, after a test of the 6800 mark helped by US stocks closing higher (Dow Jones first record close of 2014) with the US Fed delivering no surprises with a continued measured decrease to its QE3 stimulus programme and a carbon copy of the March statement.

This helped revive hopes of economic recovery after a disappointing US GDP report while the USD Index weakened towards mid-April lows <80, Gold pulled back <$1290/oz after an erratic day and the price of oil dropped on an easing of Ukraine concerns and growing US stocks.

Overnight we have had the official China PMI manufacturing reading which at 50.4 may have missed expectations of 50.5 but still showed an improvement (second month in a row) from 50.3 which looks to be what markets are focusing on (improved, still >50) given the positive opening calls by futures.

The IMF has approved $17bn package for the Ukraine and, in a remarkable turnaround, Portugal looks set to make a clean exit from its bailout programme (no emergency backstop, like Ireland), having looked destined for a second rescue only six months ago.

In Asia stocks are mixed, with trading volumes thin on account of holidays in China and Hong Kong. In Japan the Nikkei is positive by 1% helped by Japanese Economy Minister Amari said it is desirable to cut Japan’s corporate tax to about 20% and Kyodo news reported an Abe adviser called for more easing if tax impact grows to be serious.

Australia sits in the red after the 6^th straight month of deterioration for the AIG Manufacturing Index and a slowing in house price rises, even if import and export price inflation rebounded strongly. An Iron Ore price heading back towards 2-year low amid renewed Chinese concerns and Brazilian giant Vale seeing oversupply is not helping the miners.

In focus today (with most of Europe on Holiday for Labour day) we have UK Consumer & Secured Credit and Mortgage approvals (supposedly now more onerous) which will be of interest given that UK Nationwide House Prices just out show a further acceleration, into double digit annual gains. UK PMI Manufacturing seen improving.

In the afternoon, US Weekly Jobless Claims will be looked to for improvement after last week’s jump. Fed Chair Yellen will be speaking and may offer additional information on the direction of US monetary policy than last night’s FOMC statement. US Income & Spending seen rising, US PMI Manufacturing seen confirmed and ISM Manufacturing expected to show an improvement. Still plenty of US companies reporting.

Results this morning from Lloyds Banking Group (LLOY) show Q1 pre-tax profit +22% as it cut costs and bad loans declined amid a recovering  U.K. economy and it continues to plan for an H2 application to restart dividends. BSkyB (BSY) added 74K net new subscribers in Q3 (double that of a year ago), 9-month revenues +7% but operating profits -9% due to sports rights investment. Rolls Royce (RR.) says on track for flat revenue and profits in 2014, in-line with earlier forecasts.

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