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

UK 100 Index called to open -10pts at 7460, holding around overnight lows. Coupled with falling highs since yesterday afternoon this represents a bearish triangle pattern, a breakdown from which could extend yesterday’s sell-off towards 7380 June lows. Bulls need a break above falling highs at 7460 for hope of a rebound. Bears require a breach of the 7445 floor to open the door to more downside. Watch levels: Bullish 7465, Bearish 7445.

A negative opening call comes after Asian equities followed their Wall Street counterparts lower as sharp falls in oil prices weighed on sentiment, helping drag indices from recent highs.

MSCI finally including some China mainland stocks (A-shares) in its indices, thereby obliging $1.6tn of tracker funds to hold the shares, has done little to boost investor mood. It had been on the cards for years, many of those included were already available via the new HK trading links and they will still only represent a small portion (0.7%) of MSCI’s flagship index.

Australia’s ASX underperforms due to the oil price drop weighing on both Energy and Miners. Japan’s Nikkei is in the red as a stronger Yen and losses for Energy hold it back. A very muted response from China on the MSCI news.

US equity markets fell from record highs on Wednesday as Energy stocks bared the brunt of the Crude Oil sell-off. Despite notching an early intraday high, the Dow Jones soon pared gains to close 0.3% lower as General Electric weighed, while the S&P500’s Energy sector fell by 1.3% to drag the index 0.7% lower. The Nasdaq underperformed, closing 0.8% lower as the index failed to overcome emerging resistance.

Following yesterday’s sharp sell-off, Crude Oil prices have rallied from their lows as API inventory data shows a 2.7m barrel drop in US stockpiles. This slight reprieve has lifted both Brent and US benchmarks from the fresh 7-month lows traded yesterday ($45.50/$43 respectively), however support at former November lows looks tentative as sentiment remains under pressure. This afternoon’s US EIA Inventory data (3pm) will be highly anticipated as a key driver of sentiment through the rest of the week.

Gold has rallied from 5-week lows, despite the US dollar trading a 3-week high, as investors seek safe-havens amid the market sell-off and begin to price in a slower tightening cycle from the US Federal Reserve. While markets are expecting the Fed to hike rates again in 2017, expectations for a less aggressive tightening policy through 2018 and a lower normalisation point have buoyed the safe-haven asset alongside a dip in US treasury yields.

In focus today will be the Queen's Speech officially opening parliament following the election. Despite PM May still lacking a working majority as DUP talks drag on. The speech, outlining an extended 2-year blueprint for lawmakers (through to Brexit) is expected to focus on the UK’s divorce from the EU as well as how we can build a better society via the opportunities it may offer.

After the hammering Oil prices got yesterday, probing 7-month lows and bear market territory (-20% from Jan highs), US DoE Weekly Oil Inventories (3.30pm) will be the data-point of choice today as investors grapple with the dynamics of rising demand overshadowed by ever increasing supply, despite OPEC efforts to curb the latter. Can last night’s API drawdown be replicated this afternoon to rekindle some bullishness?

Other data to be aware of include UK Public Sector finances (9.30am), seen improving in May, followed by what is forecast as flat US Existing Home Sales (3pm). A transcript of remarks given by the BoE’s Andy Haldane during a regional visit to Yorkshire and the Humber yesterday will also be released around midday.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Standard Life and Aberdeen make appointments to investment management committee
• Echo Energy signs joint evaluation deal with Pluspetrol Bolivia
• Whitbread says Q1 like for like total sales up 2.9%
• Faroe Petroleum production and cash flow to gain from Statoil plans in Norwegian sea
• WH Ireland sees “significant improvement” in H1 results
• Centrica to sell Langage, South Humber Bank power stations
• UK builder Berkeley posts 50% profit rise but warns of uncertainty ahead
• Facebook gets Indonesia nod for local unit, country's investment chief says
• UK subprime lender Provident Financial warns on profit over operational disruption
• Copper flat as strong dollar holds sway
• Gold edges up on falling equities, easing dollar
• Oil languishes near multi – month lows on glut fears