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

UK 100 called to open -55pts at 6060, back around the 6050 lows of April/May (and much of March), sealing a full retrace of the mid-May rally to 6300. Overnight weakness maintains the sharp downtrend of late last week. The Bulls are looking for rebound trade opportunity that keeps us in a sideways channel. The Bears have their eyes glued to 6050 for any suggestion of a breakdown opening the door to further declines towards 5900. Watch levels: Bullish 6110, Bearish 6040.

A negative start to the new week, continuing that of late last week, comes as risk aversion remains the stance of choice. Investors continue to fret over global growth with China weekend data failing to inspire and the IMF sounding the alarm (again) over a Chinese corporate debt bubble. Anxiety persists about the risks of a UK vote to leave the EU (Brexiety?) and traders prepare themselves for a hat-trick of central bank updates this week - Fed, BoJ and BoE - even if the market implied odds of a June US rate hike are near zero after recent market moves and given significant headwinds.

Japan’s Nikkei down well over 3%, suffering from Yen strength (close to May highs) hindering exporters as the currency benefits from unwelcome safe haven seeking amid the global market sell off. While Australia’s ASX is on holiday, futures suggest declines of 1.5%, likely based on weakness in the Energy and Mining sector as commodities (except for the safe haven precious metals) pull back on global growth concerns. China and Hong Kong in the red after that IMF warning and weekend data adding to scepticism about growth stabilisation with investment slowing, even if Industrial production and Retail Sales held up well.

US markets closed off last week in the red as energy stocks tracked the oil price lower after the Baker Hughes Rig Count posted another weekly gain. That confirmed additional drilling activity suggesting shale producers coming back to market, and that $50 could be a tough level to surpass for Crude. While Brent is currently in a consolidation pattern (mid-downtrend) around $50, WTI has dropped back below to trade around $48.5.

Data-wise, a mixed bill was highlighted by UoM Sentiment falling yet beating consensus while there was another drop in US 5-10yr inflation expectations to 2.3% from 2.5%. With all the above setting up the weekend, US and global sentiment has been dealt another severe blow after Sunday morning’s mass shooting (the worst in US history) and its hijacking by Trump for his own political gains.

Gold has popped up above the $1281 level this morning to make a 4-week high, helped by Brexit fuelled safe-haven demand - the same thing that’s benefitting the Japanese Yen via weaker Sterling. A stronger break upwards for Gold should confirm the failure of Friday’s bearish rising wedge pattern and a continuation of the uptrend, though there is potential for equity markets to display a positive ‘2 fingers up to terrorism’ reaction to the tragedy in the US, as was the case following the Paris attacks.

In focus today, with a conspicuous lack of macro data, will be the fallout from this weekend’s lacklustre China data as well as the build up to policy updates by the US Fed, the UK Bank of England and Bank of Japan. Oh and of course debate continues as we enter the last full week before the UK’s referendum on EU membership. Nonetheless, away from data, listen out for comments from the ECB/Bundesbank’s Weidmann and the ECB’s Nouy for their market moving abilities when they speak at the European open and mid-afternoon, respectively.

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

• Inmarsat And Speedcast International Enter Boat Broadband Agreement
• G4S Confirms Omar Mateen Employment, But Says Not on Duty at Time of Shooting
• Imperial Innovations allots shares to Woodford Investment
• UBM says US DOJ files for clearance for proposed sale of PR Newswire
• GVC gets New Jersey licence approval in relation to Bwin deal
• Oil prices fall back below $50 as economic concerns rise