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

UK 100 Index called to open -15pts at 7715, now in a clear falling channel from last week’s 7800 peak. Bulls need a break-out above overnight highs and the channel ceiling at 7740 to reverse the downtrend. Bears require a breach of 7710 overnight lows in order to see a bearish test of last week’s 7688  lows. Watch levels: Bullish 7740, Bearish 7710.

Calls for a negative start come as the US government shutdown moves into a third day, with lawmakers failing to reach an accord over the weekend amid a contentious immigration debate. Subsequent Sterling strength is hindering the UK’s blue chip index, holding back its army of foreign-exposed constituents. Oil off highs could weigh on large-cap Energy, while buoyant base metals (Copper) may help the Miners, although they were offside in Australia overnight.

In major UK corporate news this morning: the FT reports that $24bn hedge fund Tiger Global has acquired a $1bn stake on Barclays. Again in the FT, keep an eye on UK bookmakers which could be set to see legislation cap fixed betting terminal stakes at £2.

Dixons Carphone posts strong Xmas growth, but lowers FY18 pre-tax profit guidance, names new CEO Alex Baldock. Ocado announces partnership with Canada's second largest food retailer Sobey's to develop online grocery business using the Ocado Smart Platform.

GKN contract wins take eDrive order book above £2bn; Sales forecast to grow from £33m in 2017 to £500m by 2022.Smiths Group to sell John Crane's bearings business for $35m. AVEVA ahead of previous revenue expectations for this stage of the financial year, albeit with final and most significant quarter yet to complete.

US equity markets closed higher on Friday, despite the  eventual government shutdown, with the S&P 500 and Nasdaq indices closing at record highs. The tech-focused Nasdaq outperformed, while consumer staples helped the S&P to a record finish. The Dow Jones also closed higher, just shy of Wednesday’s record level, as the 30-stock index recovered from negative territory thanks to gains from Goldman Sachs, offsetting IBM weakness.

Crude Oil benchmarks have traded sideways overnight as bullish OPEC commentary is offset by a stronger US dollar. Global benchmark Brent is hovering around $69 a barrel, off Friday’s 10-day lows of $68.5 but a distance from Thursday’s $69.8 highs, while US crude has dipped below $63.5 after recovering from Friday’s $62.8 lows.

Gold has extended its retreat from Friday’s highs as the US dollar continued its bounce from fresh 3-year lows despite the US government shutdown. The precious metal briefly dipped below $1330, having fallen from Friday’s $1338 highs, however is finding some support as the US dollar rally loses some momentum. Any progress in Washington to end the government shutdown later today will likely influence the dollar, and subsequently gold.

In focus today, on an incredibly light day for macroeconomic data, will be any progress made in German coalition negotiations and reversing the US Government shutdown, as well as opening speeches from the 2018 World Economic Forum in Davos.

With its members voting in favour of continuing formal coalition talks in Bonn over the weekend, the opposition SPD party in Germany is moving closer to another grand coalition with Angela Merkel’s CDU/CSU after months of failed talks in the aftermath September’s election and resistance from SPD Youth.

Across Germany’s southwest border with Switzerland, opening remarks will be made at the 2018 WEF in Davos, with onlookers awaiting the arrival of US President Donald Trump, UK PM May, Indian PM Modi, and a host of influential economic speakers at the elitist economic conference.

However, the US President will first have to overcome a government shutdown in the US after Republicans and Democrats failed to pass a temporary budget reprieve to keep thousands of federal employees working. At the heart of the debate is immigration, a contentious issue ahead of November mid-term elections. While a Senate vote has been scheduled to take place later today, it is yet to receive enough bipartisan support to go ahead, likely resulting in a third consecutive day of shutdown.

Data-wise, the only release of note is the US Chicago Fed National Activity Index (1:30pm), expected to rebound from a 3-month lows of 0.15 to get back above the running 12-month average to make up ground lost after November’s drop from 0.76, its best since December 2006.

 Quarterly results from across the pond can be expected from Halliburton and HP.

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