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

UK 100 Index called to open +30pts at 7380, back testing last week’s highs (and June breached support), extending Friday’s break above 7360 falling highs resistance. This gives hope for a meaningful Bullish breakout and a run back towards 7500. Bears are looking for another reversal and retrace towards recent 7300 lows. Watch levels: Bullish 7390, Bearish 7370.

Calls for gains at  the open come after a positive finish on Wall St lead by Technology and Asian bourses embracing $15bn of M&A in shipping and hotels overnight, suggesting optimism in global growth. This despite bonds continuing to react to the threat of further policy normalisation after recently hawkish (read ‘less dovish') central bank communication and a still weak Oil price.

Australia's ASX underperforms as gains for Financials (more M&A) fail to offset weakness among Miners on account of a still weak oil price, another gold sell-off and weakness among base metals even after solid China inflation data. Japan’s Nikkei outperforms thanks to industrials and weak Yen (weak trade data, dovish comment from BoJ Kuroda and following safe-haven Gold lower), Energy hampered by Oil prices.

US equity markets closed higher on Friday following the much better than expected Non-Farm Payrolls figure, offsetting the weaker Wages growth. The Dow Jones closed just shy of 100 points higher to cap off a positive week thanks to strength in McDonald’s offsetting Financial weakness, while the S&P500’s Tech sector outperformed to lift the index 0.6%  higher, a performance echoed by the Nasdaq, the best-performing index of the day, up 1.0%.  

Crude Oil prices are little changed overnight, paring early gains having encountered resistance. Brent Crude had rallied from Friday’s lows of $46.50 to test $47.20, however has fallen back below $47, while US crude fared similarly, climbing from $44 to $44.70 before retreating below $44.50. Any commentary from OPEC regarding potential deeper production cuts or FX fluctuations are likely to be today’s drivers.

Gold has fallen to a fresh 4-month low overnight, having broken below Friday’s lows as investors weigh up increasing central bank hawkishness. Non-yielding safe-haven assets such as gold have suffered as markets begin to price in higher interest rates in both North America and Europe. Despite holding up at $1205 support for the moment, note the emergence of a potential bearish flag pattern which, if completed, would take the precious metal below $1200 to around $1190.

Today’s rather sparse data calendar will focus on Eurozone Sentix Investor Confidence (9.30am), forecast to come off the boil in July (28.1 vs 28.4) 5after 4 months of back-to-back gains, but staying within a 12-month uptrend. Thereafter, with US Jobs still key for the Fed in deciding its pace of policy normalisation, the US Labor Market Conditions Index (3pm) is expected to have ticked back up (2.5 vs 2.3 prev.) in June after May’s fall from 2yr highs.

In terms of central bank speakers today, we have the text released for BoE Woods’ delayed remarks prepared for the Building Societies Association Annual Conference (10am), while we could get chat from the ECB’s Coeure and Nouy today, both attending the Brussels Eurogroup meeting.

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

• Unite Group says USAF's property portfolio independently valued at £2.07bn
• Britain's Carillion CEO quits as company issues warning, sees FY performance below management's previous expectations
• Gold miner Centamin on track to deliver on FY production guidance of 540,000 ounces
• TalkTalk's finance chief to step down later this year
• Schroder Oriental issues 150,000 shares of £0.01
• London copper edges up after brighter U.S. jobs report
• Oil recovers some losses but market still under pressure
• Gold prices edge down on steady dollar, firmer stocks