UK 100 Index called to open +5pts at 7360, having extended yesterday’s bounce from 2-day support at 7340 to test highs of 7378 overnight. This keeps the overall uptrend alive but failure to get anywhere near yesterday’s flirt with record highs may be something to keep an eye on. Bulls require a break above 7365 to maintain optimism; Bears need a breach of 7358 overnight lows. Watch levels: Bullish 7365, Bearish 7358 (range of the past hour).

Calls for a positive open come thanks to a rebound in oil (surprise US API drawdown; Saudi comments) that has helped revive Energy sector sentiment overnight. This offsets a negative US close and helps explain Australia’s ASX outperformance, Miners getting a sentimental boost from Oil’s gains whilst simultaneously welcoming a nudge higher by base metals thanks to a USD pull back.

Japan’s Nikkei suffers from that USD pullback hindering by way of a stronger Yen, whilst Energy reacts to yesterday’s oil price fall. Beware the USD move assisting with GBP’s rebound and rally to 6-day highs (pre-Article 50 positioning? dovish BoE tomorrow?). This may hold the UK Index index back from more significant gains, especially those of the key Oil and Miners.

UK 100 sentiment may be impacted by the rebound in Oil (BP and Royal Dutch Shell) and the GBP rally. The government’s stake in Lloyds falls below 3%. Hikma Pharmaceuticals (HIK) 2016 results show a 39% drop in profits due to exceptionals and revenues just below guidance. AstraZeneca (AZN) may move after its Lynparza significantly reduced the risk of BRCA-mutated ovarian cancer progression. Polymetal (POLY) reaffirms 2017-18 production guidance but cut its dividend.

US equity markets were once again at the mercy of Energy stocks as all three major bourses closed lower on Tuesday despite macro data showing an uptick in inflation ahead of today’s meeting of the Federal Reserve. Despite some strength in General Retailers, the Dow Jones closed 0.2% lower with Chevron the biggest laggard on the index, while the S&P 500 underperformed on account of the aforementioned weakness in Energy names, down 0.3%.

Crude Oil is having a welcome relief rally on the back of a surprise drawdown in US industry reported inventories following last week’s monster build. This comes alongside a rare Saudi Arabian press release reaffirming its commitment to spearheading OPEC’s production cut agreement after it emerged yesterday that the country had increased output in February. With that said, US Crude is yet re-emerge from sub-$50, with $49 the next level of resistance, while Brent crude failed to overcome $52 support-turned-resistance overnight.

Gold has rallied overnight from the floor of its falling channel, buoyed by US dollar weakness, to once again trade above $1200. However, the precious metal has since retreated from the $1204 ceiling as the Fed’s FOMC monetary policy update this evening comes into focus. Should the committee upgrade its outlook for the rest of 2017, it is likely that the non-yielding safe haven asset could suffer as a result. With that said, however, European political uncertainty could put a price floor in place.

In focus today is this evening’s Fed rate decision (6pm) at which markets are already factoring in another hike. We also have the build up to the Dutch General Election result in the wee hours of tomorrow, given potential for confirmation of another populist, anti-immigration backlash in Europe.

In terms of data, UK Unemployment (9:30am) is expected to remain at 4.8% for the fifth month in a row, although markets may instead focus on Weekly Earnings figures, given their importance to the Bank of England (BoE), as January’s reading is expected to pull further back from November’s highest since late 2015.

This afternoon, US Consumer Price Inflation (CPI) is the last inflationary offering for the Fed’s FOMC before it delivers a highly anticipated rate hike this evening. CPI is expected to show continued acceleration on an annual basis and even if the more crucial Core reading (ex-Food & Energy) ticks back from 5yr highs, it remains above the Fed’s 2% target.

US Retail Sales are forecast slower in Feb along with flat NAHB Housing and steady Business Inventories and following a surprise API drawdown last night, the hope is that official US EIA Crude Inventories show the same, to counter concerns about US production outpacing OPEC cuts. Beware, however, the potential for Gas and Distillates data to overshadow that of Crude,

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

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

• Drugmaker Hikma's FY core operating profit rises 2.4%
• UK's Gem Diamonds FY pretax profit nearly halves on Botswana mine impact
• London copper marks time ahead of Fed meet outcome
• Amec Foster Wheeler awarded £60m contract extension
• British government cuts stake in Lloyds to below 3%
• Playtech founder sells 4.1% stake in firm
• Clinigen Group: Strong H1 Performance with Adjusted EPS up 31%
• Gold rises on European poll worries; investors wait for Fed
• Takeaway.com FY EBITDA loss widens to 18.3m euros
• Dollar off recent highs ahead of expected Fed rate hike
• Oil prices jump after surprise U.S. stock draw