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

UK 100 Index called to open +35pts at 6250, rebounding after the recent sell-off had another go south yesterday to plumb lows of 6150 on mounting concerns about global growth exacerbated by a poor batch of US data and stagnant German inflation coupled with steep drops in the price of oil which saw flight to the traditional safehavens of Gold, the JPY and US treasuries.

US markets closed lower (Nasdaq outperformed), although well off worst levels, having given up significant ground earlier in the session after poor data prints from Empire State Manufacturing, Retail Sales, PPI and Business Inventories heightened uncertainty about the Fed ending its QE and the prospect of a rate hike.

After the poor US data the Fed Beige Book was similar to last month’s report: “US economic growth is modest to moderate and employment has continued to expand……consumer spending grew in most districts at rates similar to the last book while manufacturing rose in most regions”.

Q3 Results from eBay met expectations on PayPal success but the outlook disappointed sending shares 5% lower after hours. Amex revenues were a touch light while profits beat thanks to favourable cost trends. Netflix shares tanked as subscriber growth disappointed, something the company blamed on a price increase.

Overnight in Asia, stocks mostly lower taking the lead from Europe and the US on global growth worries, however, some respite was had from China’s Foreign Direct Investment rebounding in September after plunging in August and Credit growth hitting a 3-month high thanks to liquidity booting measures which has helped revive optimism and put Australian equities into positive territory.

Japan’s Nikkei the standout underperformer as the JPY strengthened in response to USD weakness on poor US data and safehaven seeking. BoJ’s Kuroda watching USD/JPY, says weak currency positive for economy and policy easing will continue until stable 2% inflation.

The UK 100 index found resistance at 6400 as expected and took another leg down to make 15-month lows 6150. Support and 100pt rebound by futures overnight will have the bears licking their lips hoping to hear a fat lady singing and see 6400 again, while the Bears will still be eying the chance of revisiting June 2013 lows of 6000. Our watch levels move to a bullish 6250/6300 and bearish 6150.

In focus today: Eurozone Consumer Price Inflation (CPI) will be closely watched after Germany’s own flat-lining print stoked worries of recession in the region. Consensus expects a rebound in September.

US Jobless Claims seen largely unchanged, however, after yesterday’s weak US data much attention will be paid to US Ind & Manuf Production where rebounds are forecast. The Philly Fed is seen giving up ground while NAHB House Price index is seen holding firm and we have Q3 results from Goldman Sachs and Google.

In commodities, prices fell to a 5-year low as energy prices extended losses on rising supplies and US data misses added to concern that global growth may be faltering, hurting the outlook for raw materials. Safehaven Gold rose to test month-highs of $1240/oz while the Oils continued to make new lows (both <$85/barrel) on demand vs supply concerns.

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