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

UK 100 Index called to open flat at 6890, having bounced from 6870 overnight lows that saw the index successfully test last Wednesday’s breakout area for support. Having been confined by a sideways channel overnight, Bulls need a breakout beyond the ceiling at 6895 to convince them a reversal and rebound is on the cards to keep the December uptrend alive. Bears need a break below the floor at 6870 to open the door for another leg lower and continuation of yesterday’s sell-off. Watch levels: Bullish 6900, Bearish 6865.

Calls for a flat open come after US bourses gave up their highs and Asian equities delivered a mixed bag overnight. Sentiment has not been helped by Oil giving up some of its OPEC-inspired gains gains and China remaining weak for a second straight day as regulations regarding risk assets bite, overshadowing positive economic data (Retail Sales, Industrial Production, Investment) from the world’s #2 economy.  News of a UniCredit capital raising has yet to inspire, with Monte dei Paschi still the outstanding weak link in the nation's banking sector, requiring urgent attention.

Japan's Nikkei is positive in spite of both Yen strength as the US Dollar finds support ahead of the Fed update on Wednesday and slightly weaker oil prices hurt Energy. Australia's ASX is underperforming, following Chinese stocks lower as commodities prices came off their highs and recent strong run north.

US equity markets have cooled off somewhat following last week’s record breaking week across the board, as a weaker Dollar and falling oil prices weighed on market sentiment, however the Dow Jones remained positive closing once again at a record high on Monday, albeit with gains much smaller than last week. Both the S&P 500 and Nasdaq closed lower, with the latter index underperforming on account of Tech weakness.

Crude Oil prices have failed to build upon yesterday’s sharply higher opening following the weekend’s OPEC/non-OPEC output deal, paring gains with Brent and US Crude back below $56 and $53 per barrel respectively. The failure for any significant rally could be linked to concerns of a resurgence in the US shale industry, while many industry observers are still questioning the commitment of some OPEC members to cut output as per the November 30 deal given some questionable reputations.

Gold has been lifted from fresh 10-month lows posted yesterday, now back above $1160, as a weaker Dollar prompted some buying as investors look towards the Fed’s monetary policy meeting tomorrow. However, this is likely only short-term respite for the safe haven assets before what is widely expected to be the Fed’s only rate hike of 2016 announced tomorrow evening.

In focus today will be the latest UK Inflation report, with headline CPI seen accelerating slightly to 0.2% MoM/1.1% YoY (0.1%/0.9% prev.). Any under/overshoot will be closely scrutinised by the BoE (and GBP traders) before Thursday’s monetary policy meeting, the latter potentially providing a reason to change course towards more hawkish rhetoric. Other figures in the data dump (Core CPI, RPI PPI) are also expected to show mild improvement, however the House Price Index is seen falling back from 7.7% to 7.3%, something that could impact the UK Housebuilders sector.

Elsewhere, German ZEW Surveys are expected to show Current Situation and Expectations up only marginally. The figure for Eurozone Expectations might even prove more significant. Once more a lack of data from the US ahead of the Fed’s monetary policy update tomorrow means the only release of note is Import Price growth, seen negative MoM and yet recovering to positive YoY.

ECB speakers continue to be rolled out en mass following Friday’s crucial QE update, with no less than four speakers today filling the void of Fed counterparts’ absence. Liikanen, Hanson and Nowotny kick things off around 9am before the leaders of France and Germany, Francois Hollande and Angela Merkel, give a joint speech mid-morning. This afternoon sees EU President Juncker address the European Parliament.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

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

• Leaked BP report reveals risk of lethal accidents (FT)
• Hunting Sees 2017 EBITDA in Positive Territory
• KAZ Minerals Secures New $300M Credit Facility
• Bgeo Group BOG purchases micro and small business portfolio
• Bellway Sees FY17 Sales Up 5%; shrugs off Brexit uncertainty
• Savannah Resources Pre-development Programme Underway at Mutamba
• Lloyds Banking: HM Govt Cuts Stake to 6.93%
• NCC To Miss FY Expectations After Contract Cancellations
• Balfour Beatty said it was on track to deliver cost saving targets in line with a long-term turnaround plan
• Great Portland Estates says executive director to leave co in December
• Centrica signs five – year LNG deal with Japan's JERA
• Carpetright H1 profit falls, comfortable with FY expectations
• Glencore, Nippon Steel agree Q1 coking coal contract price at $285/T
• Asahi to buy AB InBev's E.European beer brands for €7.3bn
• CVS Group looks to raise about £30m before expenses via placing
• Utilitywise signs partnership with Business Stream
• Copper futures dip ahead of Fed meeting