UK 100 Index called to open +40pts at 7410 (ex-div -10pts), extending yesterday’s bounce from 7360 support to breach record highs and round number 7400. This maintains uptrends from Nov and Feb, fuelling hopes of the 7400 breakout turning supportive to help with another up-leg. Bulls are content with a lack of historical and psychological resistance. Bears need a breach of 1-week rising support at 7380.  Watch levels: Bullish 7420, Bearish 7380.

Calls for a positive open come thanks to investors almost ignoring the Fed’s rate hike to concentrate on its unchanged outlook (just two more hikes this year), digesting the policy update as less hawkish, sending USD lower to help Oil and metals extend their rebounds to the benefit the likes of dual-listed Miners RIO and BLT down under overnight. 

Add to this a rather more palatable Dutch election result than feared and risk appetite has been restored. Markets are being allowed to ponder the potential for less populist French and German political outcomes in the months to come while further US stimulus supports both US growth and Fed policy normalisation, in turn helping global growth.

Asian markets have followed US bourses higher with Japan’s Nikkei helped by a weaker USD boosting Energy and Telecoms in demand, although the index underperforms due to unwelcome Yen strength for exporters. Australia's ASX is positive, but a weak Financials are offsetting strength in the commodity space where Energy and Miners are riding the wave of higher metals and oil prices.

UK 100 sentiment may be impacted by results from Sainsbury (SBRY) whose like-for-like 4Q Retail Sales were -0.5% while Balfour Beatty (BBY) swung back to profit in 2016.

Wall Street received the Fed’s widely expected rate hike overwhelmingly positively, further helped by the recovery in Crude Oil. The S&P 500 spearheaded the charge for US indices as the Energy sector led risers, while UnitedHealth contributed the most gains on the Dow Jones, offsetting weakness in Financial names to help the index close over 110 points higher.

Crude Oil is continuing its recovery from Tuesday’s 3-month lows thanks to US government inventories yesterday reporting a surprise drawdown in inventories and a welcome sell-off in the US dollar in reaction to the Fed’s rate hike. Brent Crude has overcome support turned resistance to regain its $52 handle and reach a fresh one week high while US Crude has rallied to within a dollar of the $50 mark.

Gold has been a clear winner from the US dollar’s sharp sell-off following the Fed’s rate hike, as the precious metal halts its downtrend to post fresh 2-week highs. In an unusual bullish move for the non-yielding safe haven asset after a rate hike, this can be entirely attributed to the aforementioned USD weakness, as Wilders’ Dutch election defeat eases some fears of a populist European backlash.

In focus today will be the fallout from last night’s Fed policy update and rather more palatable Dutch election result than was feared.

Data will centre on confirmation of hotter Eurozone Inflation especially after ECB President Mario Draghi recently sounded less dovish. At the same time, the potential is for the BoE policy update to strike a less hawkish tone as slower wages and retail sales growth takes some of the heat out of Brexit-induced inflationary pressures.

After yesterday’s jump in NAHB sentiment, the latest US Housing Starts and Building Permits will be of interest in terms of whether another bubble is forming. While US Jobless Claims and JOLTS Job Openings are likely unchanged in the latest week and month, respectively, the Philadelphia Fed Business Outlook may have pulled back from last month’s 33yr high.

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

• Oil prices extend gains after drop in U.S. stockpiles
• Dutch election outlook buoys euro, dollar struggles at 1 – month low
• Total declares 2016 3rd interim dividend of 0.61 euros per share, available in cash or new shares at 5% discount
• UK supermarket Sainsbury's highlights cost price pressure as sales edge lower
• UK builder Balfour Beatty returns to profit, FY underlying pre – tax profit of £60m
• Serco named preferred bidder to operate correctional centre in Australia
• UK's OneSavings Bank reports 15.7% rise in 2016 loan book
• European car sales rise in February amid volume brand slump
• Laird unveils new multi–interface platform for low–power, long–range IoT deployments
• Gold hits 1 – wk high as Fed signals only gradual rate hikes
• Shire receives European approval for label extension of Cinryze