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

UK 100 called to open +15pts at 6275, off yesterday’s 8-day lows of 6250 but still in a short-term falling channel from last Thursday’s highs. While this puts increasing pressure on the strong and longer term uptrend since February, downside potential may be limited to the mid-month breakout level of 6220. As they say, the trend is valid until it’s broken. It just depends what your timeframe is. Watch levels: Bullish 6305, Bearish 6245.

Expectations for a positive European open are in spite of mild US and Asian losses. Risk appetite still hampered by this week’s major data (GDP) and central bank updates which will refresh markets outlook for both growth and monetary policy. As per usual, a holding pattern ahead of such major risk events has well and truly taken hold.

Japan’s Nikkei on the back foot again and underperforming regional rivals as a result of more Yen strength derived from a weaker US Dollar. This despite rising expectations (and hints) of more policy easing from the Bank of Japan (BoJ) on Thursday. Australia's ASX is in the red, playing catch up from a long weekend as commodity prices continue to track back.

China held back by yet more intervention by authorities to clamp down on speculation. This time the focus is on commodities which have been used by investors as an equity-market alternative for both bullish and bearish bets and seen extreme price moves of late derived from hopes of improved growth as well as some highly leveraged bets.

US bourses closed in the red on light volumes ahead of tomorrow evening’s Fed announcement, in which clues are to be sought about a potential June rate hike. As we’ve pointed out before, time is running out to get the ball rolling with the two rate rises now forecast by the US central bank. Putting our balls on the line, we still reckon no move this year at all due to Brexit, US elections, low oil prices and a fragile global growth picture. 

It’s useful to remember ahead of time that anything gleaned by investors that’s deemed prophetic from the Fed has the potential to move the USD considerably, which would of course have implications for commodities and the UK’s heavily traded mining sector. Note also Apple (AAPL) reporting after the US close today which could have a significant impact on the Dow Jones overnight.

Crude oil prices are still strong this morning despite indications of added supply out of Kuwait and Saudi Arabia set to total up to 400,000 bpd by June. Strong refinery demand in the US combined with lower US production seems to be offsetting that, however. A weaker USD seems to be helping a little too, yet may begin to hinder after tomorrow’s FOMC announcement.

Gold is testing 2-day rising lows and the April rising trend line this morning having failed to garner much in the way of momentum. Technicals are bearish, which may indicate improved risk appetite ahead of the European open and a more bullish setup for the USD. Note gold managed to hold its consolidation pattern through yesterday. Bears targeting $1230 and below.

In focus today will be US Durable Goods Orders. Despite being notoriously volatile, the forecast rebound could boost bullish sentiment ahead of US Q1 GDP data. Thereafter, US House Price data (S&P), a proxy for consumer sentiment, is seen flat, although the official read may have ticked back in April in contrast to US PMI Services. Watch out for the Richmond Fed given the weak Fed surveys of late and in the run-up to US GDP data while US Results from Apple, eBay, Twitter and Proctor & Gamble could sway risk appetite intraday and overnight.

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

• BATs 1Q Revenue +7.5%; On Track For Good Earnings Growth
• Cobham launches 500 mln stg rights issue after profit warning
• BioInvent says swings to slim Q1 profit
• Thyssen seen down after losing out on Australian submarine deal
• E.ON's Uniper eyes cost cuts, divestments ahead of spin – off
• Mitsubishi used non – compliant fuel economy data since 1991 according to a Reuters source
• Intertek Expands Emissions Testing Capability
• Insurance broker JLT sees exceptional costs of 34 mln stg in 2016
• Diamond miner Petra raises FY production outlook
• St. James's Place saw jump in Q1 new business ahead of UK budget
• RPS Group buys DBK Partners Ltd for £13 million
• Whitbread says full – year underlying pretax profit up 11.9 pct
• Countrywide keeps FY outlook, cautions of slow down in Q2
• Carpetright says year profit expectations unchanged
• BP first quarter earnings fall of 80 pct, beat analyst estimates
• Bang & Olufsen appoints Henrik Clausen new CEO
• Boohoo year profit up 42 pct, confident outlook
• Fabege Q1 rental income up at SEK 519 million