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

UK 100 called to open +20pts at 6740, making a little headway from 7-week lows of 6690 after declines of almost 300pts in just 3 days from all-time highs 6975. The lows proved supportive for a second successive day and while the index may have only traded within a narrow range (6690-6735) this may have been enough to consolidate recent losses and provide a platform for recovery. While the Bulls eye a return to the all-time highs, while the Bears want a breakdown to Jan lows 6300. Watch levels at: Bullish 6760, Bearish 6675.

The positive opening call comes thanks to a positive session in Asia helped by healthcare and financials, solid Aussie jobs data and a South Korean rate cut which offset a negative US close as the US$ rally index at 12yr high 100.0; EUR/USD <1.05) failed to abate and the US Fed Bank stress tests saw only conditional approval for capital returns to investors in BoA and rejection of those by US units of Deutsche Bank and Santander.

While ECB President Draghi spoke positively of QE, Nowotny expressed concern at its success via negative yields and IMF’s Lagarde said diverging monetary policies pose a risk to the global economy, a point reinforced overnight by the USD remaining strong on US rate hike fears, New Zealand leaving rates unchanged and South Korea cutting.

US bourses closed with minor losses as the US dollar basket hit the psyche level 100, its highest level since April 2003, bringing the recent USD rally to near 11% as investors brace themselves for a Fed rate rise this year. The dollar’s surge comes as two Asian banks – the Bank of Thailand and the Bank of Korea – cut interest rates in the past 24 hours, surprising forecasters.

A trend of global central bank easing has put the Fed’s intentions in contrast with those of its world peers and in somewhat of a dilemma, since a US rate rise will only strengthen the USD further and squeeze the earnings of US exporters and businesses with international interests.

Asian markets mostly rose Thursday – their first gains this week after a few days of volatile trading around the US rate rise issue with Japan’s Nikkei, Australia’s ASX, Korea’s Kospi and the Shanghai Composite all trading up this morning. Positive moves were spearheaded by healthcare and financial stocks while surprising rate cuts by two Asian central banks gave further economic stimulus to the region.

In focus today in the Eurozone will be industrial production with forecasts for improvements both YoY and MoM as ECB stimulus measures filter into effect. On the other side of the pond US jobs data and retail sales are due out, with the latter looking for growth as consumers race to spend their cash ahead of a possibly imminent Fed rate rise that will make saving more attractive. Jobs data is also forecast to improve with more people expected in long term employment in the US.

US Light crude ($48.4) and Brent ($58.0) have staged a bit of recovery with the former back above $48 and the later bouncing from $56 despite the very firm USD and ever growing US stockpiles weighing. While yesterday’s EIA inventory build was a touch less than expected it was still the ninth straight weekly rise and is at odds with API data on Tuesday which saw the first drop in stocks in 2 months. Global consumption versus production still a big driver with not enough of the former and too much of the latter.

Gold has bounced from lows of $1148, just above December lows, but remains in a falling channel from end-Jan with potential to go all the way to $1130 lows. The strong USD from a combination of US rate hike fears and EUR weakness from ECB QE are delivering a double whammy hindrance, weighing heavily on the yellow metal despite plenty of geopolitical worries.

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Key Overnight Macro Data: (Source: Reuters/DJ Newswires)

• Aussie                    Consumer Inflation Expectations              Dropped
• UK                            RICS House Price Balance                             Beat, Improved
• Aussie                    Employment                                                      Better, improved
• Japan                      Consumer Confidence                                   Worse, growth slowed
• Germany               CPI                                                                         In-line, rebounded

See Live Macro Calendar for full data line-up, incl. consensus expectations

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

• SIG FY underlying pretax profit 98.1 mln stg vs 90 mln stg
• Ofcom announces review of UK's digital communications market
• Antofagasta expects miners' strike to reduce output by 8,000 tonnes this year
• Cinema operator Cineworld's profit doubles
• Serco profits collapse, kicks off rights issue
• TT Electronics full – year revenue falls
• Russian retailer Lenta expects 34 – 38 pct sales growth in 2015
• Oil producer Soco proposes dividend despite profits halving
• New bank Shawbrook plans to list on London Stock Exchange
• Argos – owner posts big drop in year – end like – for – like sales
• ITV agrees deal to buy Talpa Media, producer of The Voice
• Morrisons year profit more than halves, to cut future dividend
• Computacenter FY statutory pretax profit rises 51.3 pct
• Mulberry names non – exec director Andretta as new CEO
• Royal Dutch Shell publishes Shell Annual Report and Form 20 – F
• Lufthansa says cannot ease up on cost – cutting