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

UK 100 Index called to open +100pts at 6060 with recovery from yesterday’s 5950 lows getting above the trend of falling highs from Sept 16, putting in place a new uptrend from 5900 with support at 6000. As we write, a test of 6050 offers potential for a breakout above Weds/Thurs 6050-6070 highs and a rally back to Sept 16 highs 6250. Updated watch levels: Bullish 6075, Bearish 5985.

The very positive opening call comes as markets build on yesterday’s recovery from another test lower, helped by a slightly more hawkish speech by Fed chair Janet Yellen (on track for 2015 lift-off, but concerns remain, still watchful of events). Stocks in Asia mixed overnight after weak European and US sessions, with Japan’s Nikkei higher on hopes that a drop back into deflation (first time in 2 years) will result in more BoJ stimulus being imminent but China and Australia lower on Fed and commodity price uncertainty after the USD gained ground.

With equities having sold off following the Fed’s decision to leave rates on hold last week, the bullish overnight reaction suggests investors would prefer the Fed to get on with it and raise rates sooner rather than later. A refreshing stance after so many years of any comment about higher rates or less QE being pounced upon by the bears. However, that's the US.

In Japan news that inflation is back negative (deflation) shows that PM Abe and BoJ head Kuroda have work to do to counter weak domestic demand and lower commodity prices which their massive stimulus programme has failed to counter, and so more will be required thus boosting equities. A similar situation holds in Europe with hopes of Draghi turning up the QE dial. The divergence between central bank policy and major developed nation's/region's growth prospects couldn't be greater!

US markets closed down on Thursday after economic bellwether Caterpillar cut revenue guidance and announced 5,000 job cuts, compounding US economic growth woes. Janet Yellen spoke after market in hawkish (yet balanced) fashion, indicating as usual that US interest rates would rise in the future while reassuring us that market shocks would be avoided and retaining that all important ‘wiggle room.’ The BoE’s McCafferty mirrored Yellen’s hawkishness, this in stark contrast to more dovish tones coming out of Europe where fund managers are gearing up for ECB QE expansion.

In focus this fine Friday will be the afternoon’s US Q2 GDP, for which the third read is seen confirming a strong rebound to 3.7% growth after the weak first quarter (0.6%). Excitement may be limited, however, with the second estimate end-Aug already seeing a sharp upgrade from the advance estimate of 2.3%.  Thereafter, US Services PMI is seen solid around the 55/56 average for the year while it is forecast that US Consumer Sentiment gets back off the 12-month lows posted last month.

Crude prices continuing their sideways trend into the weekend with the usual drivers – China growth concerns and a continuing global supply glut weighing on both Brent ($48) and WTI ($45). Technical support at rising lows since yesterday could help out bullishly today, however.

Gold ($1147) had its rally halted by Yellen’s hawkish chatter which woke up US Dollar bulls, making the yellow metal more expensive to anyone not transacting in the US currency. Any US rate hike also highly likely to be bearish for gold when it happens, since it will signal confidence in the global growth outlook.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

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

• Rockhopper to drill a further well in North Falkland Basin
• Falkland Oil & Gas Agrees to Well Drilling Swap Plus Compensation
• Amec Foster Wheeler names Roy Franklin as non – exec director
• Partnership Assurance places 40mn shares in Just Retirement merger
• UK government sells more Lloyds shares, cuts stake to below 12%
• Drax to pull out of UK White Rose CCS project when completed
• Just Retirement and Partnership Assurance to raise £150m for merger
• Highlands Natural Resources signs indicative terms over Schlumberger deals