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

UK 100 Index called to open +5pts at 7245, holding its December uptrend and clear appetite to build upon yesterday’s impressive eight successive record closing high. As highlighted yesterday while resistance is lacking at fresh all-time highs we look to the 9-month bullish inverse H&S pattern that kicked off in July with potential for the breakout at 6400 to take the index to 7400. Bulls likely need to see 7250 before getting onboard while Bears require a breach of 7225 overnight lows to put paid to 3-day rising support. Watch levels: Bullish 7245, Bearish 7225.

Calls for a mildly positive start come in spite of mixed session in the US and Asia. Higher base metal prices are helping sentiment towards UK Index miners thanks to news of supply cuts in China and positive inflation data from the world’s #2 economy, while Oil finds a smidgen of support and precious metals continue their rebound. Persistent GBP weakness derived from expectations of a hard Brexit are also whetting appetite for internationally focused blue-chips.

Overnight mixed inflation data from China saw Producer Prices (PPI) blow even hotter, hitting their highest since late 2011 as prices recover from an end-2015 deflationary trough amid a commodity sector rebound. However, Consumer Prices (CPI) cooled from near their best levels in three years. Elsewhere, UK BRC Sales growth perked up in December which bodes well for Official Retail sales on Jan 20 while Aussie Retail Sales growth slowed and Japanese Consumer Confidence rebounded to fresh 3yr highs.

While Japan’s Nikkei sees its exporters hindered by a stronger Yen, Australia’s ASX is lower on banking sector losses and energy dented by weaker oil prices while China is just negative leaving Hong Kong as the standout performer.

This morning’s major corporate news is a strong Christmas trading update from supermarket Morrisons (MRW) which will either serve to buoy the sector ahead of peer results later in the week or merely go to highlight how much better MRW is doing in comparison.

In a mixed session for US equities, it was the Nasdaq that outperformed its peers, rising 0.2% thanks to continued strength in the Biotech sector that saw the index close at a fresh all-time high. The Dow Jones once again faltered before reaching 20,000, closing 0.4% lower as falling crude oil prices hampered sentiment, while the S&P 500 also saw a softer finish down 0.35%.

Crude Oil prices extended losses into the US session before recovering slightly in Asia overnight, however not before a breakdown of one month rising low support for both Brent and US crude. Despite a weakening US Dollar, Brent fell 3.8% to below $55 while equivalent US slid 3.4% to $52 as concerns that an expansion of US crude production could negate any price increase as a result of OPEC’s six month production cut, if members do indeed comply with the agreement.

Gold continues its recovery from December’s 11-month lows, helped by further US Dollar weakness in early 2017 as the precious metal stays on course to regain a $1200/troy oz. handle for the first time since November. A lack of significant US macro data and Fed speakers until Thursday could aid the recovery.

In focus today will be the fallout from the overnight Chinese inflation data, given its knock-on for investor sentiment and the key commodity space and Miners.

With most of today’s data already behind us, US NFIB Small Business Sentiment is seen continuing to build on last month's jump (99.9 vs 98.4), closing in on 10yr highs just above 100 dating back to 2014 while US Wholesales Inventories are confirmed at +0.9% and JOLTS Job Openings hold firm around 5500.

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

• Majestic Wine's sales jump 15.3% in Christmas period
• Airbus signs Memorandum of Understanding on China Airlines maintenance in Taiwan
• Petro Matad announces $5m payment from Shell
• UK supermarket Morrisons beats forecasts with strong Christmas
• Price comparison website Gocompare FY revenue rises 19%
• Bunzl acquires two businesses in UK and U.S.
• Big Yellow Group Q3 LFL rev up 5%
• UK online fashion retailer Boohoo upgrades outlook again
• Rosneft signs 5 – year oil supply deal with QHG Trading
• Just Eat confident on full year as orders grow 42%
• Yahoo to be named Altaba, Mayer to leave board after Verizon deal
• Gold hits highest in over a month on weaker dollar, Brexit concerns
• Oil recovers some previous losses, but doubts over supply cuts linger