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

UK 100 Index called to open +40pts at 7025 following yesterday’s bank holiday, with futures showing continued progress since the bounce from recent lows near 6900 which keeps us in a 6-month uptrend. Potential for weakness from yesterday’s highs to serve as a bullish flag pattern, but we also note the recent 7060 high possibly putting a cap on further advances and creating a falling channel since late April. Watch levels: Bullish 7070, Bearish 6980.

The positive open comes after the Reserve Bank of Australia cut its benchmark interest rate to 2% on Tuesday, giving a boost to the mining sector which weighs heavily in the UK benchmark index. Following the widely anticipated move, the second this year, the rate now sits at a record low as Australia attempts to crawl out of a long commodities boom amid soaring house prices – which many economists saw as a case against today’s decision.

US markets closed higher with the S&P500 finishing just shy of a record high thanks to a stronger than expected growth in US Factory Orders and a jump in ISM New York reading. Sentiment also boosted by the Fed’s Evans dovish ‘no rate hike until 2016’ comments and a Greek spokesman stating that a full agreement is possible between Greece and its creditors by end-May/mid-June even if the European Commission poo-pooed the idea saying the usual “more work required” and the FT reported that the IMF has threatened to cut off Greece’s lifeline unless partners write-off large quantities of its sovereign debt.

Asian stocks trading mostly lower after the Australian rate cut, led by Hong Kong as greater China equities slipped on concerns that recent Chinese market gains on monetary stimulus hopes may have been excessive. Australian stocks lower due to comments from the RBA about ongoing economic weakness and possibility of it fuelling an already overheated property market. Japan’s Nikkei drawing support from Wall Street.

In focus today will be the UK’s construction PMI this morning with expectations for a contraction, although a print of 57.4 would still be positive. Later on in the day we have the US trade balance looking to go more negative meaning imports are outnumbering exports in the world’s #1 economy. After Lunch US PMI  rounds off the important data releases with consensus seeing no change in April.

US Light crude ($58) and the Brent benchmark ($66) continue to crawl up support to the downside of their respective rising channels having broken through former bugbear horizontal resistance at $65 (Brent) and $58 (US Light). Both benchmarks are now testing new resistance at $67 and $60 respectively, finding hindrance in reports that Iraq exported the most oil in 30 years in April. Prices are little changed from yesterday when the UK markets were closed. Fears about a global supply glut continue to weigh, keeping the rally slow and volatile with traders awaiting US weekly oil inventory data from the API later today. Consensus is for a further 2mn barrel rise in the week ending 1 May - a 17^th straight increase.

Gold ($1189) is holding below the $1200 mark as investors await Friday’s US jobs market update for further clues on the Fed’s interest rate lift off trajectory following recent mixed data and the central bank giving itself room to breathe via its recent statement giving away little on timing. Bulls looking for the recent rebound from $1170 to get as far as recent highs $1215, unperturbed by the USD bounce.

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Key Overnight Macro Data: (Source: Reuters/DJ Newswires)

• Australia                                Interest Rate Decision                   Cut as expected

See Live Macro Calendar for full data line-up, incl. consensus expectations

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

• Glencore posts 9 percent drop in first – quarter copper output
• Greene King says second half looking tougher than first
• Aberdeen AM posts H1 outflows, says conditions to remain challenging