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

UK 100 Index called to open +10pts at 5880 which is off its worst levels of 5845 yesterday evening, but also well off its best overnight levels of 5925 with a late recovery (another dead-cat bounce?) having almost completely retraced. The sell-off keeps the index in its current downtrend although with potential support again at 5850 thanks to long-term rising support from Nov 2011. Watch levels: Bullish 5885, Bearish 5855.

The positive opening call comes despite a very mixed session in Asia with Japanese equities delivering a weak catch-up session following Monday’s public holiday. There were some gains in China as investors rush to invest in almost anything hold on to a yuan currency being devalued to maintain competitivity. Australia’s ASX edged lower on persistent commodity price weakness, notably oil falling to a 12-year low of $30/barrel on expectations of expanding stockpiles amid a global supply glut.

US futures continue to trend lower this morning after a late rally yesterday – JPMorgan’s wails of ‘sell everything on any rally’ and RBS’s expectations for a cataclysmic 2016 seemingly holding true as investors take that advice. The Fed’s Lockhart indicated that a March rate hike may now be off the cards, adding to fear in the marketplace, fear stoked by the idea that December’s move on interest rates might have been premature. It’s obvious, however, that resurgent credit-induced chaos in Chinese markets is driving the latest round of declines worldwide.

In corporate news, US aluminium giant Alcoa (AA) kicked off US Q4 earnings season posting a $500m loss, compared to a $150m profit for the same period last year and attributed to the obvious - low commodity prices - although it, bullishly and rather conveniently expects supply to fall short of demand this year. The print did, however, beat expectations, sending shares in the aluminium producer higher. The Christmas trading statement from the first of the UK’s supermarkets Morrisons (MRW) showed its first period of positive underlying sales since 2012 and PBT guidance in-line with consensus.

In focus today we have UK Industrial and manufacturing Production which are seen unchanged and rebounding in November respectively. US Small Business Optimism is expected to edge up along with JOLTS Job Openings and IBD/TIPP Economic Optimism. Away from data, and given divergent transatlantic monetary policy listen out for comments from the Fed’s Fischer and Lacker and BoE Governor Carney.

Both Brent and WTI are trading at $30 this morning with only deflationary drivers persisting and now some big investment banks gently encouraging investors to cut and run, saying prices could now go as low as $16 after their own technical wizards analysed the charts.

Gold is flat while we note potential for some good gains moving forward as equity markets suffer. The one headwind is, of course, the strong dollar that’s sitting at levels not seen since about 2004. If that continues to strengthen then gold’s northerly progress could slow somewhat, but gold is gold and its re-emergence as a safe haven will likely be relied upon by investors.

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

• Direct Line sees claims of £110-140mn from 3 UK storms
• Boohoo.com sees FY revenue growth marginally above previous guidance
• Virgin Money appoints new CFO, CCO
• Saga expects FY results in line with market expectations
• Michael Page posts 9.2% rise in FY profit
• Just Eat says 2015 like – for – like order growth of 46%
• Rentokil acquires five businesses, maintains full year expectations
• UK supermarket Morrisons beats Christmas trading forecasts
• UK Mail Group says good performance in Christmas trading period
• Debenhams sales beat expectations in Christmas period
• Oil prices tumble 3% to just over $30; traders bet on more falls