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

UK 100 Index called to open -15pts at 7125, having extended its sell-off, but off the lows thanks to a bounce off twin support at 7100. Bulls are already seeing a test of 7125 overnight highs which may inspire confidence in a recovery. Bears will want to see the bounce zone troubled again. Watch levels: Bullish 7140, Bearish 7100)

Calls for a slightly negative open comes courtesy of yet more US administration change yesterday and presidential M&A intervention (Broadcom/Qualcomm) weighing on Wall St last night to hamper Asian sentiment overnight. That said, USD Index off its lows to pull both GBP and EUR off highs to the benefit of UK Index and DAX, respectively. Oil flat (albeit still under pressure) and industrial metals extending gains thanks to acceleration in China Industrial Production growth, at the expense of safe-haven gold.

Corporate news this morning: Morrisons FY group like-for-like sales ex-fuel +2.8% (Q4 retail slower, wholesale faster), underlying pre-tax profit +11%, div +86% (final +12.2% + 4p special), pension surplus more than doubles, net debt <£1bn, on track for wholesale supply sales and profits targets.

Prudential FY operating profit +10%, Life new business +17%, profit after tax +24%, FX boost, Asia new business profit up double digits, M&G Prudential assets under management +13%, dividend +8%; to demerge into Prudential (US/Asia/Africa) and M&G Prudential.

Balfour Beatty FY underlying profits more than double with improvements across the board, FY dividend +22%, order book solid, cash up. Hikma Pharmaceuticals swings to pre-tax loss after US generics impairment; revs flat, div 23c vs 22c prev. FCA temporarily suspends Aldermore at the request of the company pending an announcement.

US equity markets closed sharply lower after the dismissal of US Secretary of State Tillerson, despite the Nasdaq clocking a fresh intra-day record high earlier in the session. The Tech-heavy index ended up underperformed peers, down 1% and ending a 7-day win streak. S&P 500 was also led lower by tech, closing 0.7% lower, while the Dow Jones finished 0.7% lower as large caps Boeing and Goldman Sachs weighed.

Gold has edged back from resistance at a 1-week high of $1330, falling as the US dollar recovers from support after President Trump fired Secretary of State Rex Tillerson. However, the precious metal remains in a 5-day rising channel as the potential for fresh UK sanctions on Russia, as well as the looming threat of a global trade war, help to underpin sentiment for the safe haven asset.

Crude Oil benchmarks are trading lower overnight having endured a significant swing after the release of API inventory data. The report showed a smaller than expected build in Crude and a slightly bigger draw for Gasoline, but an even bigger drawdown for Distillates. Brent crude, having spiked to a high of $65.7, touching 1-week falling highs resistance, before quickly paring all gains to trade an overnight low of $64.1, while US crude also gave up significant gains, trading $62 before falling to a low of $60.3.

In focus today on the data front will be Eurozone Industrial production (10am), forecast to post slower growth in January, while US Retail Sales (12.30pm) rebound in Feb and US Producer Prices (12.30pm) give us another inflationary metric to consider before the Fed’s next policy meeting (new Chair Powell’s first in charge) next week.

After last night’s API oil report (see above), the official EIA Oil Inventories (2.30pm) will be looked to for clues on oil, with prices off their highs and being held back by both USD strength and continually rising US production (shale/fracking) which is at odds with coordinated OPEC/NOPEC cuts. Listen out also for the OPEC Monthly Report at 11.20am

It’s a European-centric day for speakers as the 19th annual ECB And Its Watchers conference takes place in Frankfurt. President Mario Draghi will open the conference at 8am, shortly before Chief Economist Praet discusses QE and the challenges of policy normalisation at 8:45am, while VP Constancio participates in a debate on financial stability at 10:45am. Elsewhere in Europe, their colleague Angeloni (8:45am) discusses tapering and the end of QE and Coeure (4:15pm) will debate zero interest rate policies.

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