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

UK 100 Index called to open +10pts at 7495, after bouncing from an overnight test of rising support at 7460. Bulls still need to break above 7500 to escape the 7480-7497 overnight channel and falling highs resistance since Tuesday’s peak. Bears are looking for a breach of 7480 and another test of 7460 support. Watch levels: Bullish 7500, Bearish 7480.

Calls for a slightly positive start come despite Asian stocks following Wall St lower overnight on more worry about the US Senate delaying a proposed US corporate tax cut. Coupled with some more disappointing earnings reports, this served to undo a little more of equities’ recent ascent to record highs. The VIX gauge of market volatility in turn spiked the most in two months.

In terms of read-across, UK Index dual-listed Miners may find themselves under more pressure today after losses of circa 2% for both RIO and BHP overnight on Australia’s ASX, despite metals prices extending their bounce from yesterday’s lows, and oil prices remained firm close to recent highs.

In Corporate news this morning: Standard Chartered has agreed to a further extension of its US Deferred Prosecution Agreements (DPA) until 28 July 2018. Vedanta ups dividend after H1 revenues +39% YoY and EBITDA +37% on higher volumes and stronger commodity pricing, but net loss widens. Commencing growth projects in Oil and Gas business and Copper India.  

Galliford Try says order books for both its partnership-and-regeneration business and construction business have increased; confident of delivering a strong FY performance. Ferguson sells Stark Group for €1.03bn.  Capita agrees to a full and final settlement with the FCA regarding the Connaught Income Series 1 Fund. 

US equity markets closed lower on Thursday, retreating from record highs as concerns that the Republican Tax reform could be delayed weighed on wider sentiment. The Dow Jones shed 100 points, at one point trading as much as 250 points lower, as losses for McDonald’s, Caterpillar and United Tech dragged the index lower. The S&P 500, meanwhile, saw Industrials weigh while the Tech-focused Nasdaq underperformed.

Note, the VIX volatility gauge climbed to a 2-month high, while Disney announced its streaming service would be priced significantly below Netflix, boosting shares despite lacklustre operating income figures across the business

Whilst failing to notch fresh 2-year highs, Crude Oil benchmarks have maintained uptrend to trading within $1 of their best levels earlier this week. The prospect of an extension of OPEC-led production cuts has remained supportive, whilst the US dollar remains close to 2-week lows. Global benchmark Brent needs to overcome falling highs resistance at $64 to make a charge towards $64.6 highs, while US crude eyes $57.25 on the upside.

Gold has retreated from overnight highs of $1288.5, however remains in an uptrend from early November lows thanks to a weak US dollar and rising geopolitical tensions. This week’s Saudi sage, Trump’s North Korean-laden trip to SE Asia and Brexit negotiations have all proved supportive as the precious metal remains $2 from rising lows support at $1283.5.

In focus today, will be the second day of round six of UK-EU Brexit negotiations in Brussels, major breakthroughs still absent on the bug-bear issue of financial settlement - although there are reports that PM May (with eurosceptic approval) is prepared to offer more than the original €20bn figure - needed to unlock the door for discussions on the even more important post-Brexit transition period.

Data of note today includes UK Manufacturing and Industrial Production (9.30am), growth seen a little slower in September, while the UK Trade Deficit should improve a little and the NIESR GDP Estimate (1pm) will give us the latest on what is a solid growth trend. This afternoon, US University of Michigan Sentiment (3pm) is forecast unchanged, although there may be improvements in the Current Conditions component.

The lone speaker of the day is the ECB’s Mersch (12.30pm) speaking at the 2017 Cumberland Lodge Financial Services Summit organised the European Policy Forum in Windsor.

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