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

UK 100 Index called to open -25pts at 6615, back near Friday’s lows following a decent test of 6650, even after the weekend’s G20 meeting downunder showed leaders agreeing to boost economic growth by a collective $2tn by 2018 as they battle uneven growth, financial risks, geopolitics, waning demand and the threat of a European (and now Japanese) recession.

Recent UK 100 index activity suggests loss of momentum which could be consolidation before another up-leg, or, as we are testing support within a much highlighted rising wedge pattern coupled with falling highs on the hourly RSI, could still result in a breakdown below 6600. Our watch levels: bullish 6660 and bearish 6595.

US markets again closed around breakeven after choppy trading despite better Retail Sales data going into the holiday season and Business Inventories, a drop in import prices (not good for inflation needed for rate rise, thus bad for USD) and another climb in Uni of Michigan Confidence.

Asian markets in the red, after Japanese GDP data surprised with news of technical recession (two consecutive quarters of contraction) with the drop attributed to private inventory adjustment, a decline in confidence, bad weather and the sales-tax rise. While the news should pave the way for PM Abe to delay a second sales tax hike, he will decide tomorrow with election likely in December.

Another dent to sentiment comes from Q3 bad loans in China jumping their most since 2005 as the economy cools, fuelling concerns that banks will have to cut lending to avoid credit risk, further weakening economic growth which is already at its weakest since 1990.

As expected, Geopolitics not something to ignore this weekend, with Russian President Putin leaving the G20 early (long flight home he said) after being criticised and snubbed by peers for Ukraine situation, while ISIS extremists delivered another horrific message to the West.

Note ratings agency S&P affirming Spain’s BBB rating and stable outlook, while the Fed’s George said financial risks (fear of a bubble?) warrant a US rate hike. Data overnight showed UK Rightmove House Prices cooling in October with even London managing only a slim gain.

In focus today we have November US Empire State Manufacturing seen improving, US Industrial & Manufacturing Production forecast to have cooled in October and ECB President Draghi speaking. The former could help give US equities a boost, while the latter may be slightly off the hook in terms of more stimulus calls after last week’s Eurozone GDP great escape.

In commodities, Gold holds near a two-week high $1195 as investors closed bets on lower prices (short-covering) thanks to the metal’s first back-to-back weekly gain in a month and equities losing steam. Nonetheless, bullion is headed for its first consecutive annual loss since 2000 as the US Federal reserve debates when to raise interest rates, helping the USD strengthen, while peers ramp up stimulus.

After a brief jump which dampened deflation concerns, Oil has resumed its downward march as investors weigh up the likelihood of OPEC cutting output (pressure mounting) when it meets next week, while US production and self-sufficiency continues to climb (highest in three decades; threatening OPEC dominance) thanks to advances in drilling technology and global demand wanes (recessionary Japan is a big oil importer). US Light Crude back at $75/barrel and Brent Crude at $78.0/barrel.

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