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

UK 100 Index called to open +35pts at 7470 having extended its recovery from Friday’s fresh 6-week lows, however remains in a tight falling channel. Bulls will hope to see overnight highs of 7470 re-tested for an eventual challenge of falling highs resistance at 7475. Bears hope for overnight rising lows support at 7455 to give way for a return to Friday’s 7420 lows. Watch levels: Bullish 7475, Bearish 7455.

Calls for a positive start to the week come as reports of dissent amongst Conservative MPs has sent Sterling sharply lower overnight. The Sunday Times reported that as many as 40 parliamentarians were ready to back a letter of no confidence in Prime Minister Theresa May as the EU threatens to block key Brexit negotiations.

After losing two members of her cabinet in the past fortnight, and with no concessions on a Brexit bill expected from its negotiators in Brussels, May is under increasing pressure from members of her own party to leave Downing Street, although crucially the no confidence letter currently falls eight signatures short of triggering a vote of no confidence and a subsequent leadership battle. Any developments throughout the day will be closely watched by markets.

In corporate news this morning Taylor Wimpey backs its 2017 view after performing strongly in H2; increases FY18 dividend payout to £500m. UK spymasters warn Barclays free customer anti-virus software may have been compromised by Russia. Aggreko announces a new CFO to start in Q1 2018. Old Mutual completes the second share sale of its Asset Management business for $251m. A double digit sales increase help Ladbrokes Coral revenues recover.

US equity markets closed mostly lower on Friday as concerns about two divergent Republican tax reform plans weighed on market sentiment. Both the Dow Jones and S&P 500 closed lower, snapping their longest weekly winning streak in four years. This came despite Disney shares outperforming on the announcement of a new Star Wars franchise, as Healthcare and Energy names underperformed. The Tech-focused Nasdaq closed less than a point above breakeven.

Crude Oil benchmarks continue to trade close to last week’s 2-year highs as geopolitical tensions in the Gulf remain supportive of higher prices. Global benchmark Brent Crude is holding above support at $63.5 despite the US dollar strengthening overnight, while US Crude trades above $56.5. Gold is attempting to recover from Friday’s $1274 lows having broken down from key rising lows support, however US dollar strength may hinder the precious metal’s rebound.

With a complete lack of macroeconomic data today, in focus for traders will be continuing geopolitical themes.

In Europe, all eyes will be firmly focused on Westminster throughout the day after 40 MPs are reportedly ready to force a vote of no confidence in PM Theresa May before a key Brexit debate in the House of Commons on Tuesday, while German Chancellor Angela Merkel has set Thursday as the deadline for crucial coalition talks.

In the Middle East, Saudi Arabia will continue to set the tone for oil prices after a raft of high-ranking arrests for corruption. Finally, while President Trump continues his tour of Asia in the Philippines, lawmakers back in the US will look to build confidence in tax reform plans this week

Speaker-wise, the ECB’s Constancio (9am) delivers the keynote speech at the opening of the Euro Finance week in Frankfurt before BoJ Governor Kuroda (5:45pm) speaks in Zurich this evening.

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