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

UK 100 Index called to open +30pts at 7260, extending yesterday’s gains to test 1-month intersecting resistance overnight. This maintains Wednesday’s bounce from 7150 and keeps alive the chance of the index regaining January’s 7365 all-time highs. Bulls need to see 7270 to be convinced of another breakout. Bears want to see 7250 give way to open the door for a retrace to yesterday’s 7230 at the very least. Watch levels: Bullish 7270, Bearish 7250.

Calls for a positive open come after a strong day on Wall Street inspired by US tax cut hopes that spilled over to Asia overnight and received a second wind from surprisingly strong Chinese trade data that showed a rebound in Exports and acceleration in Imports that bolsters belief in transition to more consumption oriented economy.

Japan’s Nikkei is outperforming thanks to a stronger USD and thus weaker Yen as well as energy stocks rebounding in tandem with oil prices. The same is true down under with Australia’s ASX, despite AUD strength at odds with poor home loan data and lower central bank growth forecasts, gaining as higher metals prices assist the all important Miners.

Wall Street soared yesterday as news of Donald Trump’s impending tax reforms saw investors flood into US equities, shying away from safe haven assets. Financials regained their title as foremost contributors on the Dow Jones, with Goldman Sachs leading the index 0.6% higher to a fresh record intraday and closing high, while retailers Nike and Wal-Mart were the biggest risers. The S&P 500 and Nasdaq indices also reached fresh all-time highs, both finishing the session 0.6% stronger.

Both Brent Crude and US Crude have held above key levels despite the resurgent US dollar, having pared losses made on Tuesday this week. Both crude oil benchmarks will now have to overcome intersecting resistance levels, with Brent needing $56 to give way while the latter needs to hurdle the $53.20 mark. This evening’s Baker Hughes Rig count could provide direction for crude markets heading into next week, as the OPEC vs US shale gladiatorial match continues.

The rally in equities both in the US and Asia overnight has had a subsequent impact on Gold, as investors shy away from the non-yielding safe haven asset. The precious metal has fallen back to $1223 having failed at $1243 resistance yesterday, breaking down from February rising lows support and throwing the validity of its bullish flag pattern into question. Further equity strength today could see gold come under further pressure today,

In focus today will be the UK Trade Balance which is expected to see the deficit improve ever so slightly in December. Industrial Production is forecast to have slowed since November but accelerated on an annual basis to its fastest in over 5 years. Manufacturing Production is also expected to have slowed in Dec but rally to its best year-on-year since late 2014.

Interestingly, UK Construction Output is seen doing the reverse, accelerating for the month but its yearly rate of advance falling negative for the first time since mid-2013. Keep an eye on UK Index housebuilders and construction names for any reaction.

In the afternoon, with Inflation so key for the Fed’s outlook on hiking rates, US Import Price growth is seen largely unchanged at 0.4% in January but heating up to >3% annually, well above the Fed’s 2% stability target.

Speakers include the ECB’s Mersch (9.50am) and Governing Council Member/Bundesbank Head Jens Weidmann (10am), both in Hamburg but at separate events, the former giving a presentation and the latter a leadership handover speech at the local Bundesbank office. Don’t forget US President Trump meets Japanese PM Abe today, offering potential for diplomatic faux pas aplenty.

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

• Reckitt Benckiser to Buy Mead Johnson for $17.9bn
• Shaftesbury Has £3.2m of Vacant Space
• Unite Buys £227m  Building in JV
• Electrocomponents Records 6% Underlying Rev Growth in 4-Mos to Jan 31
• Just Eat CEO David Buttress Steps Down
• Greene King 3Q Sales Lifted By Strong Christmas Trading
• Great Portland Estates Sells Rathbone Square at 4% Discount