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

UK 100 Index called to open -60pts at 7575, having broken down from last week’s rising 7500-7700 channel, opening the door for another revisit of April lows support. Bulls need a break back above 7600; Bears require a breach of 7570. Watch levels: Bullish 7600, Bearish 7570

Calls for a negative open derive from a negative start to the week, month and quarter in Asia, with Chinese stocks pointing south again on uninspiring PMI prints and an intensification of worries about the global trade ruckus, this after Europe’s $300bn counter-threat to Trump’s proposed tariffs on cars. It's getting harder to work out who he's really targeting.

UK Index not helped by GBP off highs; metals (including safehaven Gold) and oil hindered by USD off its lows and Trump calling on OPEC to increase Crude output by 2m barrels/day, still regarding prices as too high, Brent having returned to $80 since the OPEC meeting with the supply/demand dynamic still views as tight given certain countries output issues.

In Politics we have the run-up to a key weekend for PM May in terms of thrashing out Brexit with her Cabinet. We also have German Chancellor Merkel’s being threatened with the resignation of her interior minister Seehofer in criticism of the migration deal signed last week. And then there is Mexico voting in populist AMLO (Andrés Manuel López Obrador) with a landslide victory.

In corporate news this morning, Tesco and Carrefour intend to enter long-term strategic alliance to cover global suppliers, joint purchasing of own brand products; 3yr operational framework; Each will continue to work with own local/national suppliers; formal agreement expected in next 2 months.

Micro Focus agrees to sell SUSE Business unit for $2.535bn cash (sold cash & debt free; 7.9x revenues, 26.7x adj. Op profit). Net proceeds will be used for general corporate purposes and/or returned to shareholders.  Vedanta Resources agrees to possible 825p (856p incl. FY div) cash offer from Volcon (already owns 66.5%); 27.6% premium to Friday’s close (32.4% incl. div).

AstraZeneca has both Lynparza, for BRCAm breast cancer, and Imfinzi, for unresectable Stage III non-small cell lung cancer, approved in Japan. Meggitt ups 2018 revenue guidance but cuts margins; new structure of 4 units to better align with customer base and support organic growth. Plus500 benefits from market volatility, raises outlook.

Playtech says H1 performance in-line with FY expectations but Asia downturn could still hurt revenues and EBITDA; up guidance but only to include consolidation of Snaitech. Purplebricks buys Canada's DuProprio/ComFree for US$37m. Sirius Minerals says project remains on track to deliver first polyhalite and commercial production on time.

In terms of data today, we have final Eurozone and UK PMIs (8:15-9:30am), with France, Germany and the Eurozone as a whole expected to confirm weaker reads in June along with the UK, although all should hold above the key 50-point level that separates expansion from contraction.

Positive news for the European Central Bank (ECB), which wants raise interest rates from next summer, could come from May Producer Price Inflation (PPI; 10am) if it delivers a consensus jump to 2.4% from 2%, and Unemployment hold around 8.5% lows, still in a trend of falling joblessness.

The USA joins the action mid-afternoon, with US PMI Manufacturing (2:45pm) expected weaker  (after peaking in April), another sign of cooling stateside growth (after Thursday’s slower GDP). This is followed by ISM Manufacturing (3pm), where analysts expect another fall (after a May rebound following an April drop). As always, Jobs, Orders and Price components could be more interesting than the headline print.

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