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

UK 100 Index called to open +5pts at 7530, having retreated from overnight highs of 7535, however maintaining its recovery from yesterday’s 7510 lows helped by 2-week rising lows support. Bulls will be looking for a breakout from 7535 and 7345 falling highs resistance for a fresh attempt at 7600 all-time highs. Bears hope resistance will hold, forcing a breakdown from support and a retracement to 7510, at the very least. Watch levels: Bullish 7540, Bearish 7520

Calls for a marginally higher start come after a relatively muted reaction to the passing of US tax reform, resulting in a flat to weaker session in the US. The market indifference continued into the Asian session, confirming a widely touted ‘buy the rumour, sell the fact’ event that, despite widespread optimism resulting in an equity market rally across the globe in 2017, now leaves investors mulling its long-term effect on equities.

Although the US dollar is off yesterday afternoon’s lows, it offers little benefit to Dollar-sensitive stocks on the UK 100 , while negatively impacting the multitude of base metal Miners and Oil stocks on the index.

Furthermore, UK traders will also be digesting fresh political risk after the forced resignation of UK Deputy PM Green after a widely publicised scandal involving adult material on his government computer. The third cabinet resignation in just two months does little to affirm confidence in the government, and has started speculation that PM May will now be forced into a wider cabinet shuffle in early 2018.

In corporate news, Babcock’s Chief Executive of Global Growth and Operations Bill Tame to retire; Intercontinental Hotels sees US tax rate reduction forecast at mid to high single digit percentage points; IQE Group expands IP portfolio; the UK government bans sale of new homes on leasehold basis.

US equity markets closed marginally lower on Wednesday after final approval to US tax reform was given in the House of Representatives. A lacklustre reaction to the sweeping reform saw the Dow Jones slipped as Disney losses offset Chevron gains, while the S&P 500 finished 0.1 percent lower with Utilities and Real Estate offsetting gains across the Energy sector. The Tech-focused Nasdaq closed flat as large-cap tech stocks like Apple, Facebook and Alphabet fell.

Crude Oil benchmarks have made further gains as the US dollar sees only muted gains following the passage of tax reform, with global benchmark Brent Crude trading fresh 1-week highs of $64.8 while its US equivalent has attained a $58 handle. Gold has retreated from yesterday’s US dollar weakness inspired highs, however has held above resistance-turned-support at $1265.

In focus today will be the Catalonian regional parliament elections in Spain, just two months after the calamitous independence attempt by exiled leader Carles Puigdemont. After attempting to secede from Madrid, PM Rajoy implemented direct rule over the region, plunging the country into a constitutional crisis that subsequently impacted the Euro and European bank stocks. Today’s vote may put the struggle to bed should a clear majority arise for either camp, however no clear result will likely see protracted regional uncertainty.

Data-wise this morning, the only release of note is UK Public Sector Net Borrowing (9:30am), expected to drop since its lowest level since April, however this is in keeping with annual trends for a sharp November deficit before recovering in December.

Thereafter, the final reading of US Q3 GDP (1:30pm) is expected to see the key growth measure confirmed at 3.3%, with GDP Price Index improving to 2.1% while the Fed’s preferred inflation measure, Core PCE, is seen accelerating to 1.4%, still a distance from the central bank’s 2% target. The FHFA House Price Index (2pm) is expected to retreat marginally in October, before Eurozone Consumer Confidence (3pm) is expected flat following the first positive reading in 16 years, and the US Conference Board Leading Index (also 3pm) dips below 0.5% from 1.2% previously.

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