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

UK 100 Index called to open +20pts at 7535, after another bounce, but still held back by falling highs since last Thursday’s 7565 peak. Bulls continue to believe in the this 7510-7550 range being consolidation of the 5% rally from 7200. Bears are looking for any signs of the index topping out, noting falling highs on the RSI. Bulls need a break above 7545. Bears want another test of recent lows around 7510. Watch levels: Bullish 7545, Bearish 7530.

Calls for another positive open come thanks to GBP turning back lower amid fresh USD strength overnight to help the UK Index ’s international contingent. This helps offset a mixed finish on Wall St (more record for S&P and Dow, Nasdaq just offside) and a lacklustre performance from Asia overnight, despite a bullish API oil report helping Energy and a pullback in safe haven Gold supportive of risk appetite.

Dual listed miners holding the Aussie ASX back to flat after Rio Tinto on news of fraud charges from the US SEC and BHP Billiton investors smarted at lower iron ore output, often used as a barometer for global growth. Japan’s Nikkei buoyed by a stronger USD and thus weaker Yen, while China outperforms as the 19th Communist Party Congress gets underway.

UK Index headlines include Reckitt Benckiser cutting its FY outlook after Q3 was affected by challenging markets. Rio Tinto reached $36.4m, settlement with FCA in relation to RTCM impairment; SEC civil complaint alleges fraud. AstraZeneca gets FDA priority review for Lynparza for metastatic breast cancer. BHP Billiton reiterates FY production and unit cost guidance.

Hochschild achieved record production in Q3 driven by a strong performance from Inmaculada, firmly on track to hit 37m silver equivalent ounce target for year. Hilton Foods agreed to acquire fish processor Icelandic Group UK (Seachill) for $80m cash. Foxtons Q3 revenues down but in-line, resilient despite a challenging London market.

Crude Oil prices are off their overnight highs at $52.3 and $58/barrel for US Crude and Brent, respectively, hindered by a trend of lower highs since Monday’s October peak despite a surprisingly big API Crude drawdown last night (-7.13m vs -3.9m est.). Can  official EIA data make it a fourth straight month of drawdowns this afternoon to keep prices bid, supported by geopolitical tensions (US/Iran standoff, Iraq/Kurdistan) and the remnants from US hurricanes. Will draws or builds for Gasoline and/or Distillates make things difficult?

Gold has already pulled back from a challenge on the recent $1290 breakdown. This increases the chances of us completing the bearish head & shoulders top reversal we highlighted Monday, taking the safe haven back to $1275. The reason is the USD bounce (a hindrance for USD denominated commodities), and risk appetite keeping equities around highs, overpowering any port-in-a-storm demand from geopolitical uncertainty.

In focus today will be UK Unemployment and Earnings (9:30am), the latter likely most important following yesterday’s UK inflation foray back above 3% which may have further cornered the Bank of England into a hike before year end. Expect Unemployment unchanged, but average weekly earnings may cool a touch, actually soothing inflationary concerns.

US data is limited to US Housing Starts and Building Permits (1:30pm; expected flat, consumer confidence indicator) and Weekly EIA Crude Oil Inventories (3:30pm), for the usual dose of Wednesday afternoon excitement for oil prices. Will EIA back up the big API Crude drawdown to keep prices bid?

Another busy speaker schedule sees several top tier events taking place throughout the day, including  reform-themed day for the ECB. President Mario Draghi (9:10am) discusses ‘structural reforms in the euro area’, Chief Economist Praet (12:45pm) speaks about the ‘political economy of reforms’, and colleague Coeure (3:15pm) concludes with ‘reforms and governance in the EMU’.

With Brexit negotiations still proving difficult, UK PM May is sure to be put on the spot at this week’s Prime Minister’s Questions (12pm) while New York Fed head Dudley (and colleague Kaplan) (1pm) take part in a breakfast conversation ahead of the Fed’s Beige Book report at 7pm.

US companies reporting include American Express, eBay, United airlines owner United Continental and Ashtead sector peer United Rentals.

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