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

UK 100 Index called to open +10pts at 7070, still in a narrow 7040-7080 consolidation channel after the recent sell-off, a break from which will decide the next move. Bulls need a break above 7080, to open the door for a challenge on major resistance at 7185. Bears need a breach of 7040 to extend the sell-off towards longer-term rising support circa 7000. Watch levels: Bullish 7080, Bearish 7040

Calls for a mildly positive open come after US bourses closed off their worst levels, the tech sector sell-off and Fed update jitters easing, and despite a mixed picture from Asia (ex-Japan; holiday) overnight. Helping sentiment was talk of a trilateral US/South Korea/North Korea meeting as well as strong Q3 results from economic growth barometer FedEx after hours and more gains for oil.

Corporate news this morning: Kingfisher FY sales +3.8% (-0.3% at constant FX), adjusted pre-tax profit -8.1%, net cash drops on working capital change, dividend +4%; Outlook mixed by country, UK uncertain (B&Q, Screwfix weak in Q4), France volatile, expects ongoing disruption 2018/19. GKN challenges Melrose claims in effort to convince shareholders to reject hostile takeover.

On the UK High Street, Sky reports Carpetright scrambling to secure emergency funding, Moss Bros issues a profits warning and reduces dividends, Mothercare says lenders have agreed to defer testing borrowing limits while funding talks continue and the UK’s CMA has cleared the GVC-Ladbrokes merger.

Shell gives profitable growth outlook as downstream transforms; $6-7B organic Free Cash Flow by 2020 at $60/Barrel, $9B-$12B by 2025 at $60/Barrel; Marketing to generate >$2.5B additional earnings per year by 2025; Chemicals earnings expected $3.5B-$4.0B per year by 2025. Petrofac awarded second EPC contract in India ($200m).

Ferrexpo FY sales volume -11%, revenues +21% (prices +22%), underlying EBITDA +47%, operating cash flow +6%, net debt -32%, dividends +150%, to benefit from higher pellet premiums in 2018, reflecting agreements with customers and strong demand, H1 to be in-line with last year, H2 ahead.

Vectura maintains 2018 revenue growth expectations and reiterates previously-reduced R&D investment guidance of £55-65m for the year. Softcat H1 revenues +24.9%, adjusted operating profit +19.1%, interim div +13.8%, cash conversion falls, H2 started well, confident in meeting FY expectations “but we have some important months ahead”.

US equity markets closes higher ahead of this evening’s Fed meeting, however Tech stocks remained on the back-foot as the Facebook data scandal claimed more scalps. Buoyant Oil prices helped Energy and Industrial names lift the S&P 500 0.2% higher, while Boeing helped the Dow Jones outperform as it closed 0.5% stronger. The Tech-heavy Nasdaq finished 0.3% higher, despite large cap names such as Twitter (-10.3%), Facebook (-2.6%) and Snap (-2.6%) all on the back foot.

Gold has climbed overnight as the US dollar retreats from its highest level since the opening days of March ahead of tonight’s Fed update. The precious metal has rallied from a reciprocal low of $1307 traded yesterday afternoon, heading towards falling highs around $1317 and $1319. The Fed update (and Powell’s first presser) will be highly influential on the safe-haven asset, with a more hawkish outlook likely to hurt the non-yielding asset.

Crude Oil benchmarks have extended their gains (Brent to $68, West Texas $64) after a bullish US API inventory report last night indicated draw-downs across the board last week ahead of the official EIA report this afternoon. This added to optimism about OPEC-led cuts offset rising US production (shale/fracking), further bolstered by the Chairman of Vitol (world’s biggest oil trader) yesterday suggesting OPEC will have to extend cuts into 2019.

In focus today will be Jerome Powell’s first FOMC monetary policy update as Fed Chair which will be closely watched, if not for the widely expected rate hike, then for forward guidance from the policy statement and updated economic projections (6pm) and subsequent press conference (6:30pm).

With strong GDP growth (helped by tax cuts and a loosening of federal spending) and record low unemployment, many are now positioned for four rate hikes this year, although consensus remains three. While not currently in the Fed’s guidance, just four votes are required for the FOMC to take a more hawkish stance. Furthermore, with Powell championing greater central banker ‘transparency’, he could surprise by announcing more regular press conferences (outside the usual quarterly), opening the door for more flexibility on hike timing and thus the full four increases this year.

On the data front we have the UK Jobs report (9.30am), although softer than expected UK inflation data yesterday means Wage Growth (also 9.30am) may steal the show, whether it backs up yesterday’s figures (with a hint of less inflationary pressures) or counters it, keeping GBP (and UK Index ) traders guessing about the timing of a BoE rate hike.

Oil prices rose to near 1-month highs on the back of a bullish API US inventory report last night, adding to hopes of OPEC-led production cuts countering rising US production, to keep global production in check. This afternoon’s official EIA report (2.30pm) will therefore be looked to for confirmation of a big Crude drawdown, potentially bolstering the recent up move.

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