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

UK 100 Index called to open -45pts at 7380, having extended yesterday’s breach of rising support at 7400. The index trades off its overnight lows of 7350, however, and continues to push overnight highs of 7385. Bulls need a break above these 7385 highs. Bears require a breach of overnight rising support at 7370. Watch levels: Bullish 7390, Bearish 7365

Calls for a negative open derive from losses on Asian exchanges (Nikkei -0.34%) following a sharp selloff on Wall Street (S&P500 -1.4%, Dow & Nasdaq -1.7%), as investors fretted about rising government bond yields (US 10-year Treasuries flip-flopping around the key 3% level; Moody’s projecting yields as high as 4% by 2020) and the impact on borrowing costs.

Disappointing earnings results from 3M and Caterpillar, bellwethers of global industry and services, adding earlier misses, keeping pressure on equity sentiment.

Political tensions were also in play, as Iran threatened to ditch its nuclear deal with the West and President Trump hinted at reprisals. Trump was more conciliatory, however, in terms of North Korean diplomacy, calling Kim Jong-Un “very honorable”, maintaining prospects of a positive summit.

Oil prices were flat overnight after coming off of yesterday’s highs, closing at $73.76/bbl (Brent) and 67.61 (WTI), after the release of API Oil Inventories that showed an unexpected build in crude stocks. Gold was down 0.2%, trading at $1327 after USD further strengthened amid rising US Treasury yields.

In corporate news - M&A specifically - Japan’s Takeda makes revised takeover proposal for Shire of £49/share (£47 prev), of which £21.75 cash (44.4%) and £27.26 shares (55.6%); Deadline for decision extended to 8 May. Takeda shares fell 9% overnight. Whitbread to pursue demerger of Costa. FY Group revenues +6%, underlying pre-tax profits +4.5%, div +5.6%, operating cash flow +2%.

Lloyds Banking statutory profits +23%, underlying profits +6%, Net interest margin +13bp to 2.93%,  no change to 2018 targets, very small £90m PPI provision (vs £600m in Q4). CRH announces €1bn share buyback programme.  British American Tobacco sees FX headwinds of 7% if rates stay  at current levels. Tullow Oil 2018 full year production forecast unchanged.

Persimmon seen encouraging start to the year, robust trading, forward sales +8% at £2.8bn , average selling price +3%, opened 68% of planned sites for H1 already. Croda Q1 Group Sales +2.6% at constant FX, but -2.7% after FX moves; guidance reiterated. Boohoo beats forecasts with 40% increase in 2017-18 profit helped by internet sales.

Fresnillo Q1 Silver production +14.0% YoY (-3.7% QoQ), Gold +4%/flat, Zinc +38%/+1%; outlook unchanged. Antofagasta Q1 Copper production -13.5% QoQ, Sales -26.7%, Gold production -20%, Net Cash Costs +13.2%; guidance unchanged.

In focus today will be US EIA Weekly Inventories for Crude Oil, Gasoline and Distillates (3:30pm), especially after last night’s surprise API build in Crude, which has kept oil under pressure overnight, and with consensus still pencilling in a decline.  Both Gasoline and Distillates, however, showed bigger than expected drawdowns which may help balance sentiment.

Other important data includes, Spanish PPI (8am) which will do little to spur fears of inflation, adding to a decline that began from a peak of nearly 8% YoY in Feb 2017, and has been waning back towards breakeven (1.2% est vs 1.3 prev).

A mass of US Corporates report Q1 results today include AT&T, Facebook, PayPal, Boeing, Ford Motor, QUALCOMM, Comcast, General Dynamics, Rockwell Automation, EBAY, Goodyear Tyre, Twitter, Equifax, Northrop Grumman, Viacom and VISA, some of which may have read-across to UK and European names.