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

UK 100 Index called to open -15pts at 7485 (ex-div -0.7pts), albeit off its 7475 overnight lows, Tuesday’s breakout having flipped from resistance to support. Bulls need a break above yesterday's 7510 highs to engineer another leg up, Bears a breach of 7475 support to open the door for a retrace of the recent rally. Watch levels: Bullish 7510, Bearish 7475.

Calls for a negative start derive from more GBP strength after the US Fed hikes rates last night, as expected, but perhaps not quite as hawkish an outlook (dovish hike). This sent USD lower to the unwelcome benefit of both the UK and Eurozone currencies, although both are since off their best. The Fed move added to existing GBP strength after UK MPs voted in favour of a vote to ratify the final Brexit deal, seen by many as a potential route to a softer Brexit.

Furthermore, China also delivered a surprise hike to short term rates, another curb against a potential credit bubble, although solid economic data followed shortly after to support Miners in Australia overnight, while Energy accompanies Oil prices sideways. Beware GBP moves influencing the UK 100 today as PM May heads to Brussels and the BoE updates on policy.

In corporate news, United Utilities acknowledges Ofwat publication of final methodology for 2019 price review, presentation this afternoon. Bunzl & Petrofac sees trading in line with views. Lonmin accepts all share offer from Sibanye-Stillwater (35% premium). Sports Direct backs expectations for underlying FY18 EBITDA growth of 5-15%. IMI to buy Bimba Manufacturing for $198m.

Capita continues to expect underlying pre-tax profits to rise modestly in H2. Lewisham Council selects Grainger as partner for major, ground-breaking new rental housing scheme. Meggitt notes the announcement by Dassault Aviation of cancellation of Falcon 5X programme and launch of new Falcon programme.

The Dow Jones notched yet another record high on Wednesday after the Federal Reserve hiked interest rates and congressional Republicans reached an agreement upon proposed tax reform helping Caterpillar shares to soar, however the S&P 500 edged back from Tuesday’s record close despite a fresh intraday high as the Financial sector weighed. The Nasdaq also finished higher, climbing 0.2%.

Gold extended its rally from 5-month lows yesterday evening after the US Fed’s monetary policy update, climbing as policymakers revealed projections for three rate hikes in 2018, falling short of some expectations for four rate hikes over the next 12 months. The precious metal has eased a little from overnight highs of $1259, however remains a distance above yesterday’s $1252 breakout.

In focus today will be a duo of central bank updates from the Bank of England (BoE, 12pm) and the European Central Bank (ECB, 12.45pm). No policy changes expected from either committee, in which case it’s all about the former’s minutes and outlook, and the latter’s press conference.

Data-wise, Germany and Eurozone Manufacturing and Services PMIs (8:30-9am) are seen retreating from recent highs, with the exception of German Service PMI, seen bouncing from November’s 3-month low. UK Retails Sales (9:30am) is seen returning to growth on a yearly basis in both headline and core prints, while ticking marginally higher for the month .

This afternoon, US Retail Sales (1:30pm) are expected to accelerate across the board, before US Manufacturing and Services PMI prints (2:45pm) give up a little ground.

While central banks may headline the day's events, in the background the all-day meeting of EU leaders in Brussels, including UK PM Theresa May, will also feature highly as members are expected to approve the progression of Brexit negotiations to the next phase. With oil still in focus after the Forties pipeline closure so soon after the OPEC meeting, listen out for this morning’s IEA monthly update (9am).

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