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

UK 100 Index called to open +15pts at 6930, rising lows since Friday suggesting appetite to continue the post-Brexit recovery rally towards last year’s all-time highs. Last week’s gains have also seen the index take a step closer to completing the two long-term bullish patterns highlighted last month (bullish flag + inverse H&S reversal). The daily RSI has technically moved into overbought territory but has yet to turn back. We have thus yet to receive the bearish signal required to suggest that a reversal may be on the cards. Bullish 6940, Bearish 6915.

A northerly opening call for equities comes following a largely positive session in Asia overnight with Japan’s Nikkei the only blemish in the early part of the new trading week. This is on the back of a weak GDP report from Japan (blame a strong Yen) that adds to disappointments from the US and China last week (note China rallying 3% - stimulus hopes?).

While this may add fuel to the fire of concerns about global economic health and/or strength of recovery, it can also be seen as keeping the pressure on the Bank of Japan (BoJ) to into yet more stimulus in the wake of an already sizeable fiscal promise from Tokyo.

US equity markets closed with minor losses on Friday after US indices made a spate of record highs mid-week. Lacklustre macro data didn’t help with Retail Sales missing forecasts to come in flat on the month while the ex-autos reading declined (again missing forecasts). Inflation (ex food & energy) a bigger concern still, posting as it did its lowest YoY reading in 2016 so far. Finally, Michigan Sentiment rose less than expected.  

St Louis Fed Governor Bullard then spoke about how he still sees one US rate hike this year, but with the data very much pointing the other way we still think there won’t be the opportunity to do anything like that for a while. And with US stock indices where they are currently, it looks like the markets agree.

Crude oil prices also helped to imbue equity markets with growth confidence via the mandatory OPEC ‘price stabilisation’ chatter, which has absolutely nothing to do with global growth confidence.

Gold is still in an August narrowing range with support in the form of softer macro data out of China and the US, with pressure on the USD making the yellow metal a better buy for users of other currencies. Bulls will still look for a break above major hourly moving averages before betting on further upside towards $1355. Currently $1339.

In focus today - US Empire State Manufacturing is seen bouncing back from its drop back towards neutral last month. The US NAHB Housing Market Index is also seen edging back up towards the highs of the year.

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

• Clarkson says revenue for six months ended June 30 at 147.2 mln stg
• G4S names Petrofac's Tim Weller as CFO
• JP Morgan sticks with "overweight" recommendation on UK shares
• William Hill rejects revised 888/Rank approach
• Builder Bovis says too early to assess impact of EU vote as profits rise
• Australian miners slump after iron ore futures in China drop
• London copper near one month low as China demand growth dims
• Oil prices edge up on potential producer action to prop up market