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

UK 100 Index called to open +10pts at 7465, with yesterday’s rally having found resistance at late November’s 7475 highs overnight. Bulls need a break above this to open the door for another leg higher towards November’s 7590 peak (bullish flag?). Bears are eager for any hints at a retrace towards yesterday’s 7415 breakout. Watch levels: Bullish 7480, Bearish 7455.

Calls for opening gains come after Brent Crude oil hit a 2yr high of $66 as a hairline crack results in the unscheduled closure of the main Forties North Sea pipeline, potentially for weeks. This is buoying sentiment towards at least 14.3% of the UK 100 index (oil majors), potentially more with the knock-on benefit to Miners et al, which may also benefit from Glencore upgrading FY guidance.

More M&A within commercial property also helps, with France’s Unibail-Rodamco buying Australia’s Westfield for $25bn, a monster deal so soon after last week’s Hammerson-INTU £4bn announcement. Furthermore, GBP holding around yesterday’s lows versus both USD and EUR limits the currency drag on the index.

In corporate news, Ashtead expects FY results ahead of prior expectations; 18-month share buyback of £500m-£1bn; dividend increased by +15.8%; Chairman retiring next year. Glencore upgrades FY Marketing EBIT guidance to c.$2.8bn, at top end of prior range $2.6-2.8bn range. Carpetright issues profits warning.

GlaxoSmithKline presents promising new data from DREAMM-1 study of GSK2857916 for multiple myeloma blood cancer. Balfour Beatty trading in line with expectations, anticipates FY order book in line with first half, restructuring to help achieve industry standard margins in H2 2018. Aggreko appoints Heath Drewett as CFO. 

US equity markets notched yet more record highs on Monday, with both the Dow Jones and S&P 500 reaching fresh highs, while the Nasdaq outperformed on Tech sector strength. Apple and Disney led the Dow higher, offsetting Boeing weakness, while Energy names helped the S&P to a fresh record close.

Brent Crude has edged back marginally from a fresh two and a half year high traded overnight ($66.1), however remains a distance above yesterday’s dual breakout from $64.2 and $65 after a major North Sea pipeline closed for repairs. US Crude remains more muted, trading a 1-week high of $58.4 overnight.

Gold has recovered from yesterday evening’s fresh 5-month lows as the US dollar retreats from yesterday’s highs, however remains under pressure ahead of multiple central bank updates over the coming two days. The US Federal Reserve (Wednesday), the ECB and the Bank of England (both Thursday) all provide monetary policy updates, with the former expected to hike interest rates.

In focus today will be a UK Inflation data barrage at 9:30am with expectations for a slight pick-up in Consumer Price Inflation (CPI) in November, keeping the headline annual rate at an uncomfortable 3.0% YoY and Core at 2.7% for a third and fourth consecutive month, respectively. Whilst this data may impact Retailers, the UK House Price index may move Housebuilders.

Thereafter, ZEW Surveys (10am) for both Germany and the Eurozone are forecast to show slight pullbacks. US data comprises NFIB Small Business Optimism (11am), expected to continue recovering from September’s 10-month low, before US PPI (1:30pm) rounds off the day’s major releases, potentially cooling monthly whilst accelerating to a 5-year high annually.

Events and Speaker-wise, the sixth day of the Commons committee debate on Brexit (11:30am onwards) will be closely watched, especially with the opposition Labour party beginning to lean towards a softer exit from the EU. ECB President Mario Draghi (7pm) participates in an official ECB event, the evening before tomorrow’s latest two-day policy meeting. However, don’t expect anything monetary policy related due to the policy blackout period.

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