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

UK 100 Index called to open -45pts at 6995, still under pressure from falling highs resistance since Friday’s peak, back for a test of both overnight lows and March shallow falling support. Bulls need a break above 7030 to overcome falling highs resistance. Bears require a breach of Feb 2016 (not a typo) rising support circa 6990 to extend the second leg of a 2018 bearish flag towards 6700. Watch levels: Bullish 7030, Bearish 6990

Calls for a negative open come after last night’s Fed update was digested as dovish, despite a rise in 2019-20 forecasts. This is perhaps due to the forecast for 2018 remaining at ‘only’ three hikes this year, at odds with recent market expectations of one per quarter.  This has sent USD lower, and thus GBP higher, to the detriment of the index’s significant international exposure. Asian equities mixed overnight, Japan making a positive return from a market holiday but the rest of the region in the red. Some concerns about Trump’s tariff announcement today too.

Corporate news this morning: In M&A, Melrose reaches agreement with GKN pension trustees to inject up to £1bn cash but GKN maintains bid is “entirely opportunistic” and “undervalues prospects”. Reckitt Benckiser ends discussions with Pfizer about Consumer Healthcare business; priority remains organic growth, integration of Mead and reorganisation into two units. Stobart does not intend to increase its latest rejected offer for Flybe.

Halma expects FY pre-tax profits in-line with consensus; order intake ahead of revenues, organic growth continued in H2, FX benefit from H1 reversed, now seen neutral for FY. Lamprell says revenues will come under further pressure in 2018 in the absence of significant new awards in 2017. Soco Int. FY revenues +1%, net loss (pre-E&E write-off) narrows, net cash up, dividend +5%, 2018 capex fully funded. Ultra Electronics appoints new CEO 

Ted Baker FY revenues +11.4%, Retail +10.4%, Internet +39.8%, pre-exceptional pre-tax profits +11.7%, dividend +12.1%, expects external trading conditions to remain challenging across many of its global markets. Genel Energy reports net $28.6m share for December KRI oil exports. Northgate says reduction in depreciation rates in Spain, Ireland and UK will increase reported operating profits.

equity markets finished lower across the board after the Fed’s monetary policy update, despite notching session highs immediately after the decision was released. The Dow Jones closed 0.2% lower as Apple weighed on the 30-stock index, while the S&P 500 also fell 0.2% having been as much as 0.8% higher as the Consumer Staples sector underperformed. The Tech-heavy Nasdaq underperformed peers, closing 0.3% lower.

Gold has climbed sharply after the Fed’s monetary policy decision yesterday evening, benefitting from a sharply lower US dollar - despite a 25bps rate hike and a more hawkish long-term policy outlook - as policymakers left 2018 forecasts unchanged. This helped the precious metal climb to a 2-week high at $1336 and, despite some profit taking as the dollar edged off its lows, remains above intersecting support at $1327. Any further USD declines will aid the yellow metal today as President Trump is expected to announce further tariffs.

Crude Oil benchmarks have edged a little from overnight highs on some understandable profit taking following another day of strong gains. Reports of record OPEC compliance and a bullish US inventories report helped both Brent and US crude climb to their highest levels since the opening week of February at $69.9 and $65.5, respectively.

In focus today, after the excitement of last night’s first Fed monetary policy update under new Chair Powell, will be the Bank of England’s latest decision (12.30pm) . Whilst no hike is forecast, the MPC’s economic assessment is seen keeping the door open for a move in May, helping normalise what has been consistently above-target inflation. That said, it will be interesting to see how the statement deals with Tuesday’s much cooler Feb price rises, followed up by yesterday’s acceleration in Jan Wage growth, effectively easing the squeeze  on consumer finances, and of course the slight softer GDP growth outlook given by the Chancellor last week.

Data-wise, it’s a busy day in both Europe and the US. This morning, European Manufacturing & Services PMI are seen lower across the board, with French prints (8pm) lower for a fourth (manuf.) and fifth (serv.) month, German (8:30am) manufacturing at a 6-month low while services dip to a 4-month low, and Eurozone (9am) manufacturing lower for a fourth month services extending a retreat from January’s 7-year high. Thereafter, German IFO surveys (9am) are expected lower in March, before UK Retail Sales (9:30am) are seen slowing on a yearly basis, although showing welcome monthly growth (another inflationary forces conundrum for Carney & Co.?)

This afternoon, US FHFA House Price Index (1pm) is expected marginally higher on January after December’s 6-month low, before US Manufacturing and Services PMI prints (1:45pm) are seen bettering their European equivalents, with the former expected at a 7-month high while the latter recovers from a January dip. The US Leading Index (2pm) is seen lower in February, while the Kansas City Fed Manufacturing Index (3pm) is also expected weaker.

Speaker-wise, it’s a generally European affair. Following early comments from German Economy and Finance Ministers (8am), the ECB’s Lautenschlaeger (8:30am) takes part in a roundtable event entitled "Financial Fragmentation or Integration" while colleague Nouy (9am) delivers the opening remarks at a banking governance conference. This evening, the BoE’s Ramsden (5pm) speaks at a fintech conference, although will no doubt be expected to react to today’s BoE decision.

Note, US President Trump is expected to announce a fresh range of tariffs on Chinese imports today as he ramps up US protectionism. The measures, while not confirmed, are expected to hit both high-tech and apparel sectors, also potentially introducing restrictions on Chinese investment in the US.

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