UK 100 Index called to open -10pts at 6955, having eased back overnight to digest yesterday’s 100pt bounce towards 7000. Bulls will spy the possibility that the overnight range represents a bullish flag, a breakout from which could take the index back to 7060. Bears will be eyeing any downside test of 6950 that suggests a retrace could be on the cards. Watch levels: Bullish 6975, Bearish 6945.

Calls for a negative open come on the back of a mixed session in Asia overnight that followed another record US close. Investors are traditionally cautious pending clarification from the US Fed, more so today given expectations for a rate hike as well as updated guidance on further US interest rate hikes which is likely to influence pricing across all asset classes.

Japan’s Nikkei is flat despite improved Tankan survey data as it missed expectations. Also hindering is some unwelcome Yen strength as the USD Basket retreats to 3-day lows ahead of the Fed. This begs the question are we set to see the old adage ‘buy the rumour, sell the fact’ play out this evening with a rate hike so well flagged and a cautious tone likely by Yellen?

Australia’s ASX is, however, nicely positive, easily outperforming regional peers despite a mixed bag for metals, Oil prices softening and consumer confidence disappointing. Help is at hand though with M&A in the gambling sector boosting sentiment. Chinese equities are weak for a third straight day.

US equity markets enjoyed a trifecta of record high closes once again before today’s monetary policy decision from the Fed. The Dow Jones closed less than 100 points away from the 20,000 mark, led by Tech names Apple and IBM, which helped the Nasdaq to outperform its peers rising by just shy of one percent. The S&P 500 also finished at its highest ever level, led by the Energy (despite falling crude oil prices) and IT sectors.

Crude Oil prices are continuing to slide, with OPEC scepticism once again weighing on sentiment. The IEA reported yesterday that the current supply glut could be addressed within 6 months should the group honour its production cut deal targets, however, concerns that members are unlikely to adhere to targets (as the same report details OPEC output at all-time record highs in November) are fuelling the slide.

Gold is rallying ahead of tonight’s Fed rate decision as investors open last minute positions and a weaker US Dollar eases downward pressure on the precious metal. This has helped move the safe haven asset back above $1160, however with the widely expected rate hike likely to result in a USD rally this evening, the foray could be short-lived.

In focus today will be this evening’s US Fed policy update, not so much for the rate hike markets have already priced-in, more for the outlook that Fed Chair Janet Yellen offers for policy normalisation and how many hikes to expect in 2017. After last December suggesting four hikes in 2016 and yet still to deliver even one, it won’t want to over-promise again. Nor will it want to under-promise and surprise markets. Expect a cautious tone that suggests slow and steady. Perhaps a couple of hikes that could be downgraded to just one or upgraded to three without generating too much fuss.

Data-wise, UK October Employment data will be of interest after last month's surprise drop in unemployment to fresh 11-year lows. This flies in the face of Brexit concerns, especially with weekly wage growth holding above the Bank of England’s (BoE) 2% inflation target while a weak post-referendum GBP adds to rising pricing pressure that has seen CPI hit a near 2-year high.

Eurozone Industrial Production is seen rebounding in October although the pace of expansion likely slowed on an annual basis. In contrast however, US Industrial and Manufacturing Production are seen having had a tough November, growth actually contracting and capacity use falling.

US Oil Inventories are always good for spicing up markets mid-afternoon, especially after the recent OPEC production cut agreement to help buoy global prices and with US production back on the rise thanks to higher oil prices. Oh and last night’s API data (not always a reliable precursor) delivered a surprise inventory rise last night.

While Fed Chair Janet Yellen is the key speaker this evening, don’t underestimate the market moving ability of the UK’s own Mark Carney, Governor of the Bank of England, speaking around midday.

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

• Dixons Retail says had biggest ever Black Friday week
• First – half profit rises at Dixons Carphone on strong UK demand
• Shell starts oil production from Malaysia's Malikai platform
• Zara owner Inditex's sales growth speeds up despite warmer autumn
• Hunters Property sees FY trading slightly ahead of its expectations
• IQE sees FY revenue and adjusted operating profit ahead of expectations
• Old Mutual says OM Asset Management offering priced at $14.25/shr
• Stobart names former easyJet exec as deputy CEO in aviation push
• HSBC launches special lending facility for start-ups in China's Pearl River Delta
• Micro Focus Intl posts 22% rise in H1 earnings ahead of HPE deal
• Wood Group sees FY 2016 performance in line with expectations
• UK online fashion retailer Boohoo ups outlook guidance yet again
• London copper steadies ahead of Fed decision
• Oil prices fall on rising U.S. crude stocks, OPEC output concerns