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

UK 100 Index called to open +15pts at 6565, with equity gains continuing overnight in the wake of the ECB’s fairly dovish message to re-hit the knee-jerk highs of yesterday afternoon which were wiped out fairly quickly on renewed Ukraine concerns before the uptrend resumed. Volatility sticking around thanks to central banker rhetoric and geopolitical risk.

UK 100 remains in recovery uptrend from October lows, testing early October highs 6570 and early August lows. A break above this opens up the possibility of gains to 6600-6700 and 6900 highs from which we fell in September. The break above the 50-day moving average is a plus. Daily RSI still rising, not yet overbought. Watch levels: bullish 6600, bearish 6500.

US markets closed positive (more record highs) and DJIA futures have gone on to hit 17,600 overnight, and in Asia follow suit after US data showed a bigger drop in US jobless claims and jump in US labour productivity which saw the USD strengthen and commodities weaken further ahead of the US Non-Farm Payrolls.

Cleveland Fed President Mester said the FOMC has made it clear rates could rise sooner if warranted, but could be delayed if economy disappoints. She brushed aside low inflation/disinflation seeing wages set to accelerate as unemployment falls and does not want to wait until goals reached before adjusting policy. US House Speaker Boehner said finding common ground on Capitol Hill will be hard work.

In Australia, the RBA reiterated a period of stability in rates but warned that capital outflows from Japan seeking higher yields amid the BoJ's huge QE could boost demand for Aussie assets and keep the Aussie dollar above what fundamentals justify. Australia’s Construction PMI dropped sharply while data from Japan showed big increases in domestic and foreign bond and stock buying following the increase in government pension fund (GFIF) allocations.

This morning, German Industrial Production didn’t rebound as much as expected in September, however its trade surplus and current account balance grew more.

In focus today it’ll all be about the US Jobs report with the Non-Farm Payroll additions the Unemployment Rate and the Hourly Earnings Figures. With the fed having ended QE, it’s now all about the first rate rise and whether the data justify the FOMC’s more hawkish stance.

The ADP report on Wednesday shows about 230K jobs added in October (Sept revised up, August revised down) and consensus is for NFP to post similar. But something around 250K or higher to make up from the weak August is possible. Of interest will be whether Unemployment rate drops further (participation rate key) and if wages growth can pick up to generate some inflation that warrants an eventual rate rise.

In commodities, Gold continues to lose ground, trading $1140, as US data sees the USD strengthen ahead of the US jobs report which will be analysed forensically for clues as to the timing of the first Fed rate rise post QE. Add to this central bank stimulus elsewhere boosting equities and crushing safehaven demand and soft global inflation offsetting the need for a hedge and demand drivers are lacking.

Oil is off its worst levels of the month, but still headed for its sixth weekly decline, with the strong USD hampering interest coupled with OPEC announcing that it was again cutting its price growth forecasts for 2015. US Light Crude trades $77.7 while Brent Crude remains around $82.

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