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

UK 100 Index called to open flat at 7275pts having been unable to overcome  overnight falling highs resistance after reaching a one month high of 7300 late yesterday afternoon. Bulls will be hoping for a strong opening to breakout from the trend of falling highs for a revisit to 7300 and above. Bears on the other hand will be hoping that the index will be unable to overcome resistance, leading to a breakdown from 7260 support.  Watch levels: Bullish 7285, Bearish 7250.

Calls for a flat open come as investors await Fed Chair Janet Yellen’s address to Congress this afternoon, while a key resignation in Donald Trump’s cabinet alongside slightly softer flash German GDP figures have also helped Sterling to rally against its US and European peers, inversely impacting the UK 100 ’s majority foreign earning components.

The loss of a senior official less than a month into Donald Trump’s term as US President does not bode well for the Republican as he looks to overhaul the existing political elite in Washington. However investors may pay little attention to the resignation as they instead focus on the main event in Washington and see whether Janet Yellen will definitively rule out a March rate hike (in a dovish move) or reiterate her institution’s forecasts for three rate hikes over the course of 2017.

Asian equities closed mostly lower, despite a positive US session and rising oil prices, as the weaker US dollar and subsequent Yen strength hurt Japanese equities while stronger than expected Chinese inflation data suggests that the PBoC may further tighten rates in the near future. Japan’s Nikkei finished 0.7% softer, with Yen strength weighing and Toshiba (-10%) again struggling having failed to publish results. Australia’s ASX outperformed in the region, up 0.1%, as macro data showed that business confidence in the country was much higher than expected.

Wall Street’s four main indices once again closed at record highs, with bullish optimism buoyed further by a fresh record on the Dow Transport Index, a Dow Theory confirmation. Financial sector strength helped the Dow Jones Industrial Average and S&P 500 to rally by 0.7% and 0.5% respectively as hopes of Donald Trump’s reformation of tax laws attracted bulls and Apple posted a fresh all time high, while the Nasdaq and Russell 2000 also finished firmer by 0.5% and 0.3% respectively.

Crude Oil prices have found support thanks to one-month rising lows overnight, having yesterday pared the gains made by both Brent and US benchmarks on Friday, as concerns that US production could increase by 80,000 bpd offset official compliance of over 90% by OPEC nations with regards to November’s production cut deal. However, fresh USD strength (potentially provided by Fed Chair Yellen) later today could see a bearish flag pattern develop.

Gold price has bounced from yesterday afternoon’s lows as the weaker USD buoys demand for commodities, while fresh safe haven demand as a result of Trump’s key cabinet resignation has helped the precious metal rally to 3-day falling highs resistance. Further Dollar weakness could help the yellow metal to revisit last week’s highs of $1237, however should the equity rally continue stateside investors may be deterred by the non-yielding asset.

In focus today, in stark contrast to yesterday, is a wealth of top tier macro data and speakers from across the globe. Closest to home, a deluge of UK Inflation data is released at 9:30am, including the all-important reading of Consumer Price Index (CPI), a key metric in the Bank of England’s monetary policy considerations. Whilst the monthly figure is seen swinging into negative territory (-0.5% exp. vs 0.5% prev.), the yearly figure (1.9% exp. vs 1.6% prev.) is seen continuing its advance towards the BoE’s self-imposed target of 2%. Note that the Core figure (ex-fuel), Carney and Co.’s preferred measure, is also seen accelerating, albeit at a slower rate than its counterpart at 1.7%.

Half an hour later, the second reading of Q4 Eurozone GDP is released, expected to show no change from the preliminary reading two weeks ago, however this could be influenced by the German GDP reading at 7am should the earlier figure surprise to either the up or downside. Also released at 10am are Eurozone Industrial Production figures, seen declining MoM while slowing YoY, and German ZEW Surveys, seen falling back slightly in February.

In the afternoon, US Producer Price Inflation will be closely watched for any indication of the Trump relation trade continuing, especially given the rally in US equities over the past two days, although this may be overshadowed by a quadruple helping of Fed speakers including Chair Janet Yellen speaking to US Congress in her semi-annual address to lawmakers.

Yellen speaks at 3pm, preceded by non-voting member Lacker at 1:50pm and followed by voting member Kaplan at 6pm and soon to be retired Lockhart shortly after. Other speakers of note include the German Chancellor Angela Merkel just after midday, as well as her Finance Minister/Deputy Schaeuble at 4:45pm, while Eurogroup head Dijesselbloem rounds off European speakers at 6pm

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

• Britain's Rolls-Royce posts record reported loss
• Copper firmer after hefty overnight gains on supply woes
• Inmarsat commits over 1,500 vessels to Fleet Xpress
• Acacia Mining says 2016 total dividend more than doubled to 10.4 cents/shr
• Pendragon sees 2017 performance in line with expectations
• Oil stable on OPEC – led cuts, but market remains range – bound
• TUI Group says summer bookings in line with expectations
• TUI Group says Q1 losses narrow
• TUI CEO: Travelopia sale to lead to book loss of 130m EUR
• Pension consultant Xafinity to list in London on Feb 16
• Gold prices rise ahead of testimony from Fed's Yellen
• Shell, Pavilion Gas to start shipping LNG to Singapore in 2017