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

UK 100 called to open -65pts at 5900, with yesterday’s failure to get back above 6000 potentially putting us on a collision course with February lows of 5500. This via a 400pt bearish flag pattern that replicates the recent decline from 6300 after that teaser bounce. The bulls will be hoping we hold up in a 5900-6000 sideways channel while Bears are rubbing their hands with glee that we are already testing 5900 support. Watch levels: Bullish 5920, Bearish 5880.

European bourses are called lower after declines in Asia, as markets build upon US losses and suffer from more adverse currency moves in the wake of a dovish Fed message and the Bank of Japan holding fire on more stimulus to help the economy. Brexit fears continue to intensify (the Fed again citing it as a headwind) a week out from the referendum. Markets are struggling to shrug off risk aversion sending bond prices higher and yields ever lower/more negative.

Japan’s Nikkei down 3% with exporters getting a battering from a surging Japanese Yen. This is derived from a combination of continued safe haven seeking amid market jitters, the BoJ refraining from more stimulus and a dovish Fed statement taking the US dollar from its recent highs. Note an increasing FOMC faction suggesting only one rate hike this year (we still say none given the calendar of event risk).

Australia's ASX faring better, flat despite a weak Energy and commodities space, as global growth worries (concerns about Brexit ripples?) offset a weaker US dollar that would normally be of benefit.

An oil price languishing around recent lows (US Crude $47.5, Brent $48.5), down for a sixth straight day, is a result of another US stockpile drawdown being offset by an easing in global disruptions. Gold breaking out towards 2016 highs of $1305 helped by a weaker USD on delayed US rate rise expectations and a lack of market confidence with shelter being sought from market turmoil.

In focus today will be digestion of last night’s dovish Fed policy update and what Janet Yellen had to say about the outlook for both the US economy and global headwinds including next week’s UK referendum. The Bank of Japan’s own dovish thoughts will also count before the Bank of England makes it a hat-trick of central bank communication in the space of 18-hours.

Data-wise, UK Retail Sales are forecast growing slower in May, likely on referendum uncertainty. Eurozone Consumer Price inflation (CPI) is expected to have improved in May, albeit still stubbornly deflationary on an annual basis.

The Bank of England policy update will see rates unchanged but the minutes will be scrutinised for hints as to the bank’s views about necessary action post referendum (rate cuts? stimulus?) given the now very real possibility that a Leave vote wins. Note the potential for more Brexit opinion polls today to sway sentiment.

US Consumer Price inflation (CPI) is seen largely unchanged in May, although the Fed’s Yellen may smile at the sight of core CPI (ex-food and energy) ticking another 10bps above target. Hopefully Wage growth will also show improvement.

After that surprise recovery by Empire Manufacturing, amid an awful run of US regional manufacturing data, a similar result for Philly Fed could suggest last month was an aberration and markets assume the same true of that weak US Jobs report.

Lots of central bank speakers today, but the key event will be UK Chancellor George Osborne’s speech at the annual Mansion House Bankers’ Dinner in London where he will take the opportunity to reiterate the economic impacts of a Brexit vote (emergency budget? spending cuts? tax hikes?) and bolster Remain's arguments which have lost traction of late.

While the BoE Governor Mark Carney is also speaking, a prepared text on Fintech will avoid him straying across the central bank/political divide, interfering in European matters and inflaming the Leave camp ahead of the referendum.

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

• Faroe Petroleum Oil and gas discovery and operations update
• FirstGroup Statement re South Western rail franchise competition
• Safestore Holdings 1H Pretax Profit Falls; Says 2H Started Well
• WS Atkin FY Pretax Profit Rises Despite Some Tough Markets
• Base Metals Dip in Asia Post Fed Meeting
• Fund Managers Getting Nervous About Brexit
• BHP BILLITON: Samarco (JV between Vale and BHP) no longer expects to resume mining operations this year
• POUNDLAND: South Africa's Steinhoff has bought a 23% stake and is considering a full cash bid
• Royal Dutch Shell says its subsidiary in the Philippines  (PSPC) is in the process of preparing an IPO