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

UK 100 Index called to open +40pts at 5970, having made another late bounce to retest the highs of yesterday. This gives hope to the bulls that a bottom has been found and a short-term reversal is on the cards. Investors now looking towards the trendline of falling highs at 6200 as a target even if, overall, we remain in a long-term downtrend. Watch levels: Bullish 6005, Bearish 5940.

The positive opening call comes after a late US rally and a recovery in the oil price from 13yr lows coupled with better than expected Chinese trade data overnight and another flat fix for the Yuan. A better Chinese trade surplus will help offset capital outflows that have pressured the currency and lead to state intervention while the better trade data will inspire hopes of global growth recovery.

Improved Chinese import and export contraction has given a lift to Asian equities from 3yr lows, although interestingly, Chinese bourses are in the red. Could it be that even they are sceptical of official data with year-end bookkeeping a likely reason for the upside surprise? China worries still prevalent, unlikely to go away any time soon.

Japan’s Nikkei outperforming thanks to the China data as well as less safehaven seeking seeing the JPY weaken to the benefit of exporters. Australia’s ASX is set to break an 8-day crisis record losing streak, helped by a rebound in materials and energy as Oil rebounds from below $30/barrel and despite AUD strength after the Chinese trade data.

US markets closed higher for a second straight day, but not without another volatile session as markets continue to fret about China and Commodity price weakness, but taking some solace from some strong domestic data and Beijing-inspired calm after such a turbulent start to the year.

In focus today we have French Consumer Price Inflation seen improving in December although only back to breakeven, in-line with weak Eurozone figures last week and still suggesting more ECB help is required. This is likely further bolstered by expectations for poor Eurozone Industrial Production in November. This evening we have the US Beige Book assessment of the economy which will be of interest after that strong Non-Farm Payrolls print. Speaker wise we have the Fed’s Rosengren and Evans.

Both Brent and WTI are off their worst levels with the former having made the landmark test below $30/barrel amid continued fears of a supply glut as oil majors rush to cut jobs and capacity in the face of oversupply and slowing demand and investment banks vie for the most bearish target sub-$20. Any further weakness will just add to existing deflationary pressures being felt the world over which would likely delay further rate rises and possibly even inspire further accommodative policy.

The new risk-on attitude amid Chinese calm has seen Gold continue to retrace from its rebound to 2-month highs, now back testing its recent breakout level of $1080. Support or breach? After the recent strong US jobs report speculation of another US rate rise is rising, to the benefit of the USD and thus undoing demand for safehaven appeal of the zero-yielding asset.

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)

• Sainsbury's upgrades outlook after strong Christmas
• Premier Oil says shares suspended from trading pending announcement
• Santander UK appoints Annemarie Durbin as independent non – exec director
• John Menzies says CEO to resign
• CMC Markets to proceed with 
• Ted Baker says expect to end year with a clean stock
• Intu Properties offers Equity One Inc common stock in U.
• Daily Mail group CEO Morgan to retire at end of
• Shoe Zone says falling oil price having a positive impact on
• Tullow says has enough cash to make it through weak oil
• Rockhopper raises recoverable oil estimate for Sea Lion
• Britain's Sports Direct buys stakes in U.S. firms Iconix and
• UK's Game Digital reaffirms first – half profit
• UK subprime lender Provident sees FY results in line with market
• Galliford Try says construction order book increased to 3.7 bln stg
• Dunelm says underlying LFL performance grew 2 pct for 26 weeks to Jan. 2