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

UK 100 Index called to open -15pts at 7285, but it is in the midst of a strong rebound (+50pts) from a fresh overnight test of last week’s lows. Back in the prior range, Bulls need a break above 7300 in order to revisit the 7325 ceiling. Bears require another breach of the 7275 channel floor to for a fall back to the overnight lows. Watch levels: Bullish 7300, Bearish 7275

Calls for a negative open stem from President Trump upping the ante with China, following through on his threat to cast his trade tariff net even wider, this time targeting another $200bn (incl. many consumer goods), on top of the pre-existing $50bn. The new tariffs start at 10% next week, rising to 25% next year if China fails to help reduce the US-China trade deficit.

Piling further pile pressure on Beijing, and just like last time, Trump has already laid the groundwork for more tariffs, saying he has his eye on the remaining $267bn of Chinese imports to the US if Beijing retaliates (PBOC intervention?). Nonetheless, sentiment resilient with Chinese equities staging a late rally and Japan reacting as a potential beneficiary.

In corporate news this morning Ocado Q3 revenues +11.5% YoY, in-line with guidance, orders +11.4% but average order size flat. Fox extends its 1400p offer for Sky to 1pm on 6 Oct.

BHP Billiton cautious on short term market outlook, long term view remains positive; has flexibility to balance debt cutting, investment, cash returns; to drop Billiton from name. Marsh & McLennan makes an offer to buy Jardine Lloyd Thompson for £4.3bn, paying £19.15 in cash per share, a 34% premium.

AstraZeneca says Fasenra asthma drug yields positive long term results in new trial. Aviva completes £600m share buyback. Meggitt names Louisa Burdett as CFO-designate from Victrex.

BBA Aviation acquires US aftermarket service provider Firstmark for $97m. Grainger signs £52m construction contract on its Newbury PRS scheme.

Spire Healthcare H1 revenue -1.1% YoY, adj. op profit, -41.4%, EBITDA -20.5%, div flat. Declining NHS and lower than expected private admissions hitting revenue. EBITDA guidance updated to down 16-20% after August profits warning. Appoints new COO from Greene King.

Smart Metering Systems H1 revenue +27% YoY, EBITDA +29%, dividend +15%. Some operating challenges in transition to SMETS2 meters expected in H2. FY guidance unchanged. Paragon Banking reiterates guidance; boost from Idem disposal; retail deposit base now over £5bn.

In focus, on what is a quiet data for macro data, may be ECB President Draghi (8:15am), with  a keynote address at an event in Paris organised by France’s Prudential Supervision & Resolution Authority (ACPR) followed by colleague Nouy (ECB chief supervisor; 9.15am).

Given Draghi’s outsize influence on financial markets, traders will be listening out for any fresh assessment on economic growth and price stability although. So soon after the latest ECB meeting and press conference (last Thurs), any drastic change in views would surprise. That said, the overnight move by President Trump to expand China import tariffs is significant news.

As for data, US NAHB Housing Index (2pm), projected weakening in September, to its lowest since Sep 2017, and API Oil Inventories (9:30pm) this evening, are the only points of interest for UK Index investors. Note US consumer foods manufacturer General Mills reports Q1 results.

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