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

UK 100 Index called to open +10pts at 7375 having recovered from yesterday afternoon’s 75pt sell-off from 7410 highs to 7335 lows. After trading 7390 overnight highs, the index has fallen back to bounce from rising support just shy of 7370, although is being hindered by intersecting resistance at 7380. Bulls will be hoping for a quick hurdle of 7380 resistance for a march towards 7390 and yesterday’s 7410 highs. Bears, on the other hand, will want risk-off sentiment to continue for a breakdown of rising support at 7365 and 7360. Watch levels: Bullish 7390, Bearish 7360.

Calls for a slightly firmer open come as global risk-off sentiment continues into the European open, following further safe-haven flight during the Asian trading session, however concerns of rising geopolitical tensions may have been somewhat eased by a US clarification of its position on the Syrian conflict. Rising Crude Oil prices are helping to provide some support to the wider commodities market following the first easing of Chinese producer inflation in 7 months.

UK Index sentiment this morning will likely be influenced by Tesco, as the UK’s largest supermarket by market share reports a 0.7% like-for-like increase in sales, its first increase in almost 7 years, while reducing its debt pile by 27%. Rising Crude Oil prices may help the index’s heavily weighted Energy contingent, although sharply lower metals prices could hurt Miners.

Asian markets were mostly lower overnight, with the brunt of losses being felt on Japanese equities (Nikkei -1.1%) as the Yen trades at its highest level since mid-November due to safe-haven seeking, hurting the country’s exporting contingent. Australia’s ASX also trades lower, as its Telecom sector falls by over 1% on reports of increasing market competition.

US equity markets closed lower on Tuesday as the heightened geopolitical fears carried over from the European session, however closed well off their lows as sentiment recovered into the close. The Dow Jones closed just shy of flat, with Apple weighing as the Tech firm is hit with a lawsuit from chipmaker Qualcomm, while the Tech sector as a whole led the S&P 0.1% lower. Unsurprisingly, the Tech-focused Nasdaq index underperformed its peers, down almost a quarter of 1%.

Crude Oil prices are continuing their rally from March lows, with Brent Crude trading above $56.20 a barrel for the first time since 7 March, marking its 7th consecutive positive session, while US Crude hits $53.50 in its 6th straight winning session. This comes after API inventory data overnight showed a 1.5m barrel drawdown ahead of tonight’s official government data, while reports that Saudi Arabia will push other OPEC members for an extension of the group’s production cuts adds to bullish sentiment.

Gold price has made further gains as investors seek safe-haven assets amid heightened geopolitical tensions, trading yet another fresh 5-month high. Having come off its $1280 overnight highs, investors in the precious metal will be hoping that the flight to safe-haven assets continues into the European session.

Following on from yesterday’s inflation release, in focus today will be the latest UK Employment Report. Headline Unemployment is seen holding steady at a record low of 4.7%, with the Employment Rate expected to cool to 70K from 92K previous.

With headline and core inflation remaining above the Bank of England's 2% target, policymakers will be hoping Average Weekly Earnings does not fall below the consensus target of 2.1% from 2.2% previous (2.3% ex-bonus), especially given the increasing price of essential household goods. We may even be given instant reaction to the latest UK macroeconomic release from the central bank, as Governor Mark Carney gives a speech to the International FinTech Conference in London at 9:40am.

At midday, OPEC releases its monthly production report, while US Import Prices (1:30pm) will provide the latest insight into US inflation ahead of Friday's CPI release. The OPEC report will be followed by DOE EIA Oil Inventories (3:30pm), adding the usual dash of excitement into Crude Oil prices.

Speakers of note include Fed voting member Kaplan (3pm) at a Q&A session in Fort Worth, Texas,  While the Bank of Canada Governor Poloz (4:15pm) gives his reaction to the central bank’s latest monetary policy update.

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