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

UK 100 Index called to open +30pts at 7525, after breaking above 7515 to clear falling highs resistance since Friday prior. Bulls like this as it extends the rebound from last Wednesday’s wobble and opens the door for a challenge on October’s 7555 highs, maybe even June’s 7600 record. Bears will be looking for any fresh downside test of 7500. Watch levels: Bullish 7530, Bearish 7510.

Calls for a positive open come after a positive US session driven by Tech was built upon in Asia overnight, helped by yet more strong earnings reports, Oil continuing pushing fresh multi-month/year highs, solid China PMI Manufacturing and optimism about Trump’s Fed Chair announcement and long awaited Tax reform.

Japan’s Nikkei welcomed tech sector gains and a weaker Yen, while a slightly lower PMI Manufacturing still beat expectations. Australia’s ASX’s Energy embraced higher oil prices while Miners welcome solid China PMI Manufacturing. Chinese equities themselves are the only blot with small declines.

UK corporate news includes; Next cuts growth guidance, Q3 sales disappoint. AstraZeneca says asthma drug Tralokinumab disappoints in phase 3 trials. Paddy Power Betfair 3Q Underlying EBITDA +7%; slightly raises FY guidance. Smurfit Kappa 3Q Profit -9% amid continued fiber price pressure. FDA recommends approval of Indivior drug for opioid addiction treatment. Morgan Sindall raises FY guidance on margin improvements.

US equity markets finished October on a positive note, with the three major indices all closing higher ahead of today’s Fed meeting. The Nasdaq once again outperformed, basking in the glow of strong results for an array of Tech names ahead of Facebook results after-market today, while Apple strength helped the Dow Jones to finish 0.1% higher. The S&P 500 closed just above break even as Kellogg and Mondelez both rallied over 6% post-results, offsetting a Under Armour shares down 24%.

Crude Oil benchmarks are trading fresh multi-month and multi-year highs after API reported inventory drawdowns above and beyond estimates. Crude Oil inventories fell by 7.7m barrels against estimates of only a 2.6m barrel drawdown. This has helped global benchmark Brent crude continue to climb higher after reaching a $61 handle for the first time since June 2015, while US crude approaches a $55 handle, trading at its highest level since February.

Gold is testing falling highs resistance at $1275 after the US dollar retreated from its highest level since Monday afternoon, looking to breakout from a 2-week downtrend. The precious metal will likely be heavily influenced today by the Fed’s monetary policy update, while any further clues from President Trump as to who will lead the central bank from next year will be equally as influential.

In focus today will be the US Federal Reserve Monetary Policy Update (6pm). No policy change is expected before December’s widely expected hike, although market-implied probability (Fed Fund futures) of a December hike has fallen to 67% (from 83%). As usual the statement will be soured for any hints about policy path. In the meantime, traders are more focused on President Trump’s choice of next Fed chair, a toss-up  between ‘continuity Powell’ and an untried and more hawkish Taylor.

This morning, UK Manufacturing PMI (9.30am) is forecast almost unchanged from September, holding close to 2017 highs before Deputy Bank of England (BoE) Governor Cunliffe speaks before the House of Lords EU Financial Affairs sub-committee.

This afternoon, US ADP Employment (12.15pm) will, as usual, be looked to for clues about Friday’s US Non-Farm Payrolls report, with big rebounds expected for both (especially the latter) following weather disruption in September.

US PMI Manufacturing (1.45pm) is expected to confirm October jump to its strongest level since January, although ISM Manufacturing may have peaked, with inflation markers suggesting similar and traders also interested in New Orders and Jobs.

As for US EIA Oil inventories, they have potential to surprise to the upside after API data showed much bigger than expected drawdowns for Crude, Gasoline and Distillates.