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

UK 100 Index called to open -10pts at 7725, off its Wednesday high of 7760, though still within a 7-week rising channel. Bulls need a break above 7740 to move back into its latest narrower channel’s upper half; Bears require a breach of 5-day rising support at 7720 to test the floor of the rising channel at 7710. Watch levels: Bullish 7740, Bearish 7710

Calls for a slightly negative open are in spite of gains on Wall St after Q1 earnings from retailer Macy’s, suggesting strong US consumer spending. Higher oil prices (Brent Crude at $79.41, continue to support UK Index Energy) but a USD off its highs has helped GBP rebound to usher the UK Index back from highs. Miners could find themselves in a trade-off: weaker USD helps metals, stronger GBP hurts value of foreign profits/dividends.

Markets under additional pressure by a Telegraph report that the UK might be prepared to remain within the customs union (supporting GBP, denting UK Index ) after Brexit. Stormy coalition talks also continue in Italy, though investors may be reassured by parties abandoning suggestions they might seek a €250B bond write-off by the ECB.

President Trump also sounded conciliatory notes over North Korean summit prospects and trade talks with China, helping the markets ignore geopolitical tensions and focus on economic news.

In corporate news this morning, Bookmakers may react to the UK government saying it will reduce the maximum stakes on fixed odds betting terminals to the minimum £2 proposed. William Hill updated guidance

British Land full year NAV +5.7%, portfolio +4.5%, underlying profits -2.6%, div +3%, strong leasing activity in London offices; retail to remain challenging. 3i Group NAV +24%, private equity gross returns 30%, infrastructure +29%, 22p final div +22% (total div +13%); good momentum. Thomas Cook H1 pre-tax loss narrows; Summer bookings +13% (59% sold), FY trading in-line.

Experian Q4 total revenues +12%, organic +8%, 27.7% EBIT margin +10bp, pre-tax profit -4%, 93% cash conversion, interim div +10%, FY div +8%, new $400m buyback. National Grid FY profits +24%, expects US business to continue performing well, UK remains on track to outperform.

Royal Mail FY revs +2%, adj. op profit +1% (+6% after transf. costs; margin +20bp), PBT +1%, CF +30%, net cash; UK Parcels, Int. & Letters (UKPIL) revs flat, profits -8.2%, GLS revs +10%, profits +16%; GDPR+business uncertainty could push letter vol declines to top end of guidance.

Mothercare announces CVA, £113m refinancing; £28m rights issue mid-to-late Jun, 50 of 137 stores to close, rehires CEO.

In focus today will be March Eurozone Construction Output (10am) potentially posting a rebound, normalising from a sharp Feb drop, itself normalising from a sharp Jan spike. However,  after that cold snap in March may well rear its ugly head again to dent growth expectations.

Then it’s all quiet until US Weekly Jobless Claims and the Philly Fed Manufacturing Index (both at 1:30pm), the former seen largely unchanged, the latter to have improved in May, and the US CB Leading Economic Index (3pm) showing slightly faster growth in April.

Several prominent central bank speakers are also featured today which could move the major currency pairs (USD/GBP/EUR), including ECB VP Vitor Constancio (11:30am, 1pm; dove), BoE Chief Economist Andrew Haldane (5pm; hawkish), and two dovish Fed members, albeit non-voters; Neel Kashkari (3:45pm) and Robert Kaplan (6:30pm).

Among US companies reporting tonight will be retailers Walmart, JCPenney and Nordstrom, as well as a semiconductor manufacturer Applied Materials.

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