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

UK 100 Index called to open -30pts at 6030, having pulled back from yesterday's afternoon rally highs but still holding above 6000 and within a solid 2-week rising channel. Further upside still available to 6200 where we find 8-month falling resistance, and 6400 if the recent bullish complex head & shoulders reversal pattern runs to its full potential. Bullish 6065, Bearish 5985.

The negative opening call comes after largely down sessions in the US and Asia as the retrace in Oil extended on faded hopes of coordinated global output cuts, looking US stockpile data and S&P cut ratings/outlook on several European commodity-linked names including BP, BLT, RIO and RDSb. All this added to already dented sentiment from weak US and China data adding to global growth concerns.

Even overnight news of Republican candidate Trump losing in the Iowa caucuses hasn’t provided any relief due to renewed uncertainty about nominees on both sides of the aisle.

Asian stocks down for their first day in 5 (China as usual bucking the trend) as material and energy names slip on worries connected to a deteriorating China offsetting the BoJ-inspired rally from taking interest rates (kind of) negative and hinting at more stimulus in-line with the ECB.

US bourses had a lacklustre performance on Monday amid Fed chatter from vice chair Fischer who thought that 4 hikes this year is about right (policy is still highly accommodative), even though he’s finding it ‘difficult to judge’ what the Fed will do in the short term given all of January’s market unease. While similar periods of ‘global economic weakness’ have historically had little permanent effect on the US, note that markets are still pricing in just one rate hike in 2016.

Corporate-wise, note Alphabet (GOOGL) earnings sailing past expectations, leaving the tech behemoth snapping at Apple (AAPL)’s heels for title of world’s biggest company, and all the scrutiny that comes with it. On the other hand, BP (BP.)’s profits went down the plug hole to the tune of 91% in Q4 (compared with Q4 2014) while the yearly figure was down 51%.

In focus today we have German & Eurozone Unemployment seen stable along with UK PMI Construction although Eurozone Producer Prices seen weaker for the month, but deflationary pressure easing over the year. Really, after another oil price drop? In the afternoon, after weak US GDP and Manufacturing data, watch out for updates on ISM New York and Economic Optimism.

Gold managed a new 3-month high around $1130 overnight as it continues to reverse course in slow and steady fashion, with fresh declines in oil looking likely to translate to equity market weakness and continue to polish the yellow metal on no-nonsense safe haven grounds.

Crude prices are off their highs again as markets come to the realisation that any cooperation between OPEC (or Saudi Arabia) and anyone else is highly unlikely, not least because Goldman Sachs said so. Note also more US inventory data out this week that’s expected to continue to show burgeoning US stockpiles while it’s at prices not much higher than current levels that shale starts becoming competitive...  

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Sainsbury's agrees 1.3 bln stg deal for Argos owner Home Retail
• Ocado says expects multiple deals in medium term
• BP Q4 replacement cost loss at $2.23 bln
• BP says upstream project in Algeria to start up shortly
• ICAP says U.S. DoJ requested additional information on Tullett Prebon deal
• UDG Healthcare sees FY adj. diluted EPS up between 6-8%
• Amec Foster Wheeler wins contract with US Air Force
• Tullett Prebon says U.S. DoJ seeks more information on ICAP deal