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

UK 100 Index called to open +15pts at 6625, holding its trend of rising highs and lows from mid-October’s correction base 6070, albeit with the pace of gains slowing. 6600 has been exceeded overnight keeping the door open for further gains and continual recovery towards abandoned high 6900, although we remain realistic about more considered profit taking after a near 9% bounce with the advancing trend narrowing gently (potential rising wedge). Our watch levels move to a bullish 6650 and bearish 6600

US equities posted modest gains which nonetheless saw the DJIA and S&P500 hit new record highs, with data limited to a stable US Labour Market Conditions Index in October thanks to an upward revision to September and Employment Trends Index improving (supporting Fed’s end to QE and optimism over US economy weathering signs of global slowing). Another oil price slide helped, delivered by a stronger USD.

The ECB’s Mersch kept the central bank stimulus ball rolling saying ECB ready to widen stimulus to ABS purchases this/next week, adding there is no room for more rate cuts and sovereign QE is still an option to help the struggling region’s economy and fight the threat of slowing growth and deflation.

The US Fed’s Rosengren said accommodative policy should stay until 2% inflation target met, but expects wage growth absence & falling commodity prices to keep prices down. Fed must respond vigorously to avoid too low inflation, siting high cost of too low inflation borne by ECB and BoJ.

Asian equities overnight mixed with Japan’s Nikkei the outperformer hitting 7yr highs, taking the lead from Wall Street helped by a USD rally which saw USD/JPY move back to near recent highs, exporter equities benefiting from the weaker Yen.

Lots of data out, with Japan’s trade data and current account balance improving much more than expected in September, however, Consumer Confidence fell further along with Eco-watcher sentiment surveys and while Bank lending accelerated, bankruptcies improved fell markedly.

Note reports of PM Abe considering dissolving lower house of parliament and calling a snap election if he decides to postpone the second stage of doubling the sales tax to 10% next week to help the economy recover from the slump caused by April’s tax hike. GDP data out next week will be key in decision.

Hong Kong’s Hang Seng showing similar gains to US, but Australia’s ASX200 in the red despite an on mixed Business Surveys in October (Conditions up, confidence down) and in-line but slowing Q3 House Price growth. Note good news for retailers, with UK BRC like-for-like shop sales stabilising in October.

In focus today, we have only the US NFIB Small Business Optimism survey to look forward to around midday, on account of there being public holidays in France (Armistice Day) and the US (Veterans Day) with expectations for stable to slightly improved reading in October.

In commodities, Gold has fallen back to support at $1150/oz, holding above 4yr lows, dented by the stronger USD, a positive US labour report and continued advances by US equities offsetting demand for the safehaven. Bargain hunting which took it to $1180 been and gone already? Support $1140 and Resistance $1180.

Oil down again on forecasts that a sixth weekly gain in US Crude stockpiles  will bolster speculation that rising supply is running ahead of demand. Stronger USD also a hindrance. US Light Crude trades $77.1/barrel (above recent lows of $76) but while Brent Crude has returned to lows of around $82.0/barrel.

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