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

UK 100 Index called to open -30pts at 6150, with the recent downtrend accelerating after a breach of 6250 support yesterday resulted in a sharp sell-off, which extended overnight. In spite of a pause around 6150 overnight, there is potential for another leg down to 6000, with little support before August rising lows. Upside may be hindered by an extension of the recent channel floor proving resistant overnight. Watch levels: Bullish 6170, Bearish 6120.

The negative opening call comes after Asia stocks joined the European and US sell-off which stemmed from another commodity price slump as markets debate the diverging prospects of a slowing China needing less materials and Fed chat supportive of a US rate hike next month (92% of economists expect a hike) keeping the USD strong to the detriment of dollar denominated energy and raw materials price. Are markets worried about the hike itself, or the hike being too early?

In Asia, Chinese stocks down on weak credit growth, putting doubts in the minds of believers of the new consumer led economy, even if it supports the case for more stimulus. Japan outperforming thanks to good Industrial Production data, a Mitsubishi UFJ share buyback and despite a stronger JPY (safehaven seeking; Gold out of favour). Australia unsurprisingly suffering from the commodity rout.

US stocks continued the sell-off theme on Thursday, intensifying this week’s downtrend as  an upward trending USD added to the pressure on commodities, themselves already suffering from a perceived lack of demand from a slowing China. Energy thus finishing the session as the worst performer with Materials hot on its heels. Note the Bloomberg Commodity Index at its lowest seen since 1999.

Fed chat saw St Louis President Bullard arguing that a prudent approach to monetary policy would involve ‘edging’ interest rates back towards more ‘normal’ levels, given that conditions for a rate hike have been met. But they haven’t been met - inflation remains below target as argued by Evans who wants to see more evidence of a sustained recovery, while  Lacker, who dissented at the October meeting, said that low inflation does not necessarily necessitate keeping rates at record lows for longer.

In focus today will be Eurozone GDP figures, after French and German prints delivered mixed messages and given all the  focus on the ECB and its hints about more stimulus. In the afternoon, US Retail Sales growth is expected to have improved in October, although Producer Price inflation is likely to show persistent pressure. US Business inventories are seen delivering another month of no growth although Consumer Confidence may continue its rebound from recent lows.

Crude oil is probing the lower bound of the recent trading range on a bigger than expected US inventory build while OPEC is also saying that its own surplus is the largest it has been in at least 10 years. It’s still all about attitudes towards oversupply. Will Brent and US Light Crude bounce off support, or break through to the downside?

Gold now around 5-year lows with the same Fed drivers bearing down on the yellow metal for 12 out of the last 13 sessions. Could December be the time to go shopping for gold?! Note also fellow precious metal Palladium, for what it’s worth (not much these days…), sinking by 13% this week - its worst since Sept 2011.

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

• Polymetal Agrees up to $350m Pre-export Facility; Buys Lichkvaz Property
• HSBC Holdings says deputy chairman Simon Robertson to retire at 2016 AGM
• Castings says H1 pretax profit of £9.51m
• Rotork says FY expectations remain unchanged
• Stanley Gibbons says rev for H1 at £27m
• Hellermanntyton says group rev for 9 – months to Sept. 27 +17.8%
• Galliford Try Sees FY Results in Line With Expectations
• Diageo Overhauls Marketing In The U.S.
• Statoil Successfully Bids for New Licences Offshore East Coast Canada
• Savannah Resources PLC Drilling Underway Targeting High Grade Copper, Oman