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

UK 100 Index called to open +5pts at 6145, having retreated marginally from Friday’s bounce highs of 6160. Once again we start the week with the Feb uptrend intact and the possibility that this sideways move is consolidation, however, a meaningful break above 6200 is required if we are to extend the bullish run. Bears remain obsessed by the index’s inability to crack both the 200-day moving average at 6185 and the 6200 level in March. Watch levels: Bullish 6175, Bearish 6130.

The flattish opening call comes despite gains in Asia where investors play catch up with improved European and US sentiment in the wake of Thursday’s bazooka ECB policy update. After a volatile reception last week, the dust has finally settled on Draghi’s revised measures being a net positive. A jump in copper is helping risk appetite, even if commodities are broadly unchanged.    

More gloomy data from China over the weekend has boosted hopes of more stimulus for the slowing economy (bad news is still good news when it comes to China) while the new stock market regulator has pledged to keep propping up the equity market. Elsewhere, markets are readying themselves for more central bank decisions from the Bank of Japan (Tues), US Fed (Weds) and Bank of England (Thurs). While no changes are anticipated, rhetoric can always surprise.

Japan’s Nikkei outperforming in Asia thanks to a weaker Yen, a rebound in machine orders data (helping copper) and an outside chance the Bank of Japan eases policy further (unlikely in our view as markets adjust to its introduction of negative rates). Chinese equities show technology leading the way after the PBOC weakened the renminbi in the wake of poor macro data (Industrial Production, Retail sales) while Hong Kong is benefiting nicely from real estate M&A.

US markets closed off last week in the green (S&P closed above its 200-day moving average for the first time this year) with energy stocks continuing to benefit from a buoyant oil price. The equities/oil correlation continues. The Fed is due to meet on 15 & 16 March with Janet Yellen’s press conference on Wednesday likely to be scrutinised yet again for its language (no rate hike is expected this time).

This comes as bond markets appear to be pricing in another 2016 US rate rise amid solid macro data  - a departure from early Feb consensus which put the chances at zero. The odds on June are currently seen at 43% while December sees a 75% likelihood the Fed will act, while in our view either of those will be a dangerous time to do so. June is still mid-US election primaries (though it may present a good opportunity to ‘bury bad news’) and December sits just after the election proper. Note this probably wouldn’t be an issue if it weren’t for Trump.  

In focus today, we have only Eurozone Industrial Production to look forward to on the data front, with a rebound anticipated in January. Thereafter expect continued toing and froing in terms of what to expect from other central banks this week after the ECB’s bold move last Thursday.

Crude prices are holding up this morning, in cahoots with stock markets, with both markers at or just below late Feb rising lows. Brent has further support around $40 at the floor of a consolidation pattern while WTI is testing $38.10. As long as these levels hold, we’re confident the price can push higher. Data showing another fall in the number of active US drilling rigs gives us something fundamental to grab hold of too, but note the familiar OPEC/non-OPEC production freeze chatter is potentially getting a bit tiresome for oil traders by now.

Talk of the Fed meet tomorrow and Thursday has seen somewhat of an exodus from Gold following Friday’s 13-month highs as investors head into risk assets in the expected absence of a US rate hike. Note the combination of that and encouraging macro data helping equities in the shorter term and likely to stifle Gold’s progress this week. However, we wouldn’t expect the yellow metal to breach February rising support $1243.

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

• British utility SSE sells stake in Clyde windfarm for $510mn

• Greencoat UK buys stake in Clyde Wind Farm from SSE

• Ascential says 2015 results in line with expectations

• NMC Health's FY EBITDA rises 46.7% to $150.3mn

• Spire Healthcare says CEO Rob Roger to step down

• UK's Cerillion says trading on AIM to commence on March 18

• Stanley Gibbons in £13mn placing and open offer