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

UK 100 Index called to open -10pts at 7490, back testing shallow rising support going to back to mid-Friday. This extends the sell-off from yesterday’s highs to retest the lows. Bulls looking for a bounce and break back above 7500 before getting too excited. Bears angling for shallow rising support and yesterday's 7485 lows to give way. Watch levels: Bullish 7510, Bearish 7480.

A negative opening call comes courtesy of GBP extending its rebound versus USD (re-testing end-May; breakout?). This is weighing on sentiment towards UK Index international exposure as we head into the latest Fed update and another likely US rate hike. Note a mixed Asian session overnight, itself at odds with more stateside record highs as Tech regains its mojo, but oil off its highs. DAX called positive despite Euro strength

Australia’s ASX is again the standout performer, as a Tech rally echoes that on Wall St, although Japan’s Nikkei has failed to join in as losses for Toshiba outweigh gains for Nintendo. Energy is dented by a rise in US stockpiles (API data; same from EIA this afternoon?) taking Oil prices from yesterday’s highs, although metals prices (and Miners) are benefiting from the weaker USD and broadly supportive Chinese data overnight.

US equity markets traded fresh all-time highs yesterday as the recent Tech sell-off came to an abrupt end, with all three major bourses closing higher. Both the Dow Jones and S&P 500 closed at fresh record highs, helped by Financial and Materials names ahead of this evening’s FOMC meeting. The tech-focused Nasdaq outperformed, up 0.7%, recovering from its worst two-day performance of 2017.

Crude Oil prices, having rallied into the European close yesterday, are on the backfoot as overnight private sector Oil inventories data reported a 2.75m barrel build. This once again brings rising US production into focus as OPEC-led production cuts attempt to address the global supply glut. With that said, both Brent and US benchmarks are off overnight lows on account of USD weakness.

Gold is trading higher ahead of this the US Federal Reserve’s FOMC policy update this evening thanks to US dollar weakness, however the precious metal is off its overnight highs. Having broken out of its tight $1260-$1268 falling channel, it is back trading at the former channel ceiling of $1268. Fed outlook this evening will be key to the safe-haven asset’s performance, with markets looking for the central bank to reiterate forecasts of two further 2017 rate hikes - a bearish factor for gold.

In focus, will be the latest monetary policy update from the US Federal Reserve (7pm). A rate hike is priced in, taking the benchmark range to 1%-1.25%. Greater onus, however, will be on outlook and whether we get hints about another two hikes this year, vindicating last December’s 4-hike forecast. Any mention of timing on trimming its QE-bloated balance sheet would also be welcome.

With early 2016’s disastrous forecasting still fresh in markets’ memory, any move away from prior forecasts might see USD confidence drop and Chair Janet Yellen’s press conference (7:30pm) become a heated affair, given markets’ dislike of uncertainty and surprises.

Data-wise, following yesterday’s hotter-than-expected UK Consumer Price Inflation (CPI) for May, Wages Growth (9.30am) is likely still advancing at a slower pace than prices, maintaining the squeeze on UK consumers. April Unemployment data is forecast pretty much unchanged.

Eurozone Industrial Production (10am) may have swung back positive in April, although probably slowed annually. This afternoon, US Consumer Price Inflation and Retail Sales (1:30pm) are the final major data prints before the Fed FOMC updates on policy this evening, with expectations for both price and retail sales growth to have slowed in May. US Crude Oil Inventories (3:30pm) have potential to echo last night’s API inventory build, keeping pressure on oil prices.

A raft of ECB speakers are expected to share thoughts, mostly early morning, including Dutchman Knot (8:30am), Estonia’s Hansson and Germany’s Bundesbank head, uber-hawk and potential Draghi successor Weidmann (9am). Latvia’s Rimsevics speaks after the market close (6.30pm).

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

• IGas Energy says look forward to exciting second half
• Mulberry Group FY pretax profit rise 21% to £7.5m
• British American Tobacco says trading well, in line with expectations
• Aggreko says acquisition of KBT in Indonesia
• WH Smith group sales up 2% for 15 – weeks to June 10 period
• UK builder Bellway says demand did not cool ahead of election
• Charles Stanley FY swings to pretax profit of £8.8m
• Australia's BHP Billiton rises; Elliot calls on co to 'upgrade' board
• Standard Chartered brings in senior talent to fuel U.S. expansion
• Copper prices fall ahead of U.S. Fed outlook
• Gold edges higher, all eyes on Fed
• Oil prices fall on OPEC output increase, rising U.S. crude stocks