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

UK 100 called to open -45pts at 7140, having fallen back to the floor of a 1-week falling channel, ever closer to October intersecting rising support at 7100. Bulls need a break above 7160 for confidence in a short-term rebound. Bears require a breach of 7125 to breach the floor of the current falling channel. Watch levels: Bullish 7220, Bearish 7155

Calls for a negative open come after Asia traded lower in spite of a strong Wall St finish. Optimism about a US-China trade truce and this week’s US-NK summit in Vietnam proved short-lived, markets spooked by a flare up in military tensions between India and Pakistan, with Indian planes striking its neighbour’s territory in an overnight raid.

GBP is stronger, further supporting the case for a lower UK Index open, following reports that PM May could offer Parliament a vote on whether to press on with a “no-deal Brexit” or request an extension to the Article 50 deadline of 29 March. This is hot on the heels of the Labour opposition officially throwing its support behind a potential second referendum.

In corporate news this morning, Standard Chartered FY underlying pre-tax profit $3.86B (+28.1%) misses $4B est; $15B revenues (+4.7%), in-line; Costs +3.4% cuts expense ratio; 4.6% return on equity misses 5.0% est (targets 10% by 2021); final div +36%; Net interest margin +3bps; To exit low return markets, returning excess capital via buybacks. Shares +2.5% in Hong Kong overnight.

Persimmon FY legal completions +1%, group revenue +4% (beating +1% consensus), pre-tax profit +12.9% (marginal beat), £2bn forward sales flat. Final dividend unchanged, but will pay additional 125p interim dividend. Confirmed Dave Jenkinson as CEO. 8 weeks average private sales -4% YoY after a tough comparable (stamp duty cut). 2019 trading in-line and sees 2019 completions flat YoY.

Croda announces 115p special dividend; ordinary div 49p (+6.55); FY revenues £1.39B, in-line (+1.8%), adj. operating profit £342.5m (+3.1%), just below consensus £345.6B; pre-tax profit +3.5% also misses estimates, free cash flow +57.7%; global conditions remain challenging.

AstraZeneca Phase III POLO trial for Lynparza significantly delayed disease progression as 1st-line maintenance treatment in germline BRCA-mutated metastatic pancreatic cancer. Land Securities says MD of Retail Portfolio has resigned. RSA Insurance announces replacement for CFO Scott Egan who has become CEO of UK & International Division.

Fresnillo FY adj. revenue +0.5%, EBITDA -13.7%, pre-tax profit -34.7% after higher stripping ratio at Herradura, inflation and depreciation. Interim dividend +27.7%, but final dividend -22.8% (making est. FY div. -8.6%). Sees another challenging year ahead, with higher inflation, lower metals prices and higher depreciation costs. Cuts 2019 silver production guidance.

Meggitt FY results beat ests; orders +8% (+12% organic), revenues +4% (+9% org), underlying op. profit +4%, free cash flow -15%, final dividend +5%; on-track for 2021 targets; Civil aerospace and US defense outlook positive (+4-6% organic); sees 2019 group revenues +3-5% organic.

Babcock trading in-line, FY profits guidance (-3%) unchanged. Notes extra Brexit costs and to book a £10m one-off tax cost and extra £10m ongoing cost per year. Order book & pipeline +3.2% YoY.

Travis Perkins 2018 revenues +4.8% (4.9% like-for-like), adj. operating profit -1.3% (-0.9% ex property profits; H2 +10.7%), adj. pre-tax +1.2%, final div +3.3%; 2019 adj. op. profit seen similar. Drax FY adj. revenues £3.8B and EPS 10.4p just shy of est; adj. EBITDA +9%, dividend +15%.

In focus today will be Fed Chair Powell (3pm), scheduled to deliver his regular semi-annual testimony on monetary policy and economic outlook before the US Senate Banking Committee.

Today also looks to be a busy day in the House of Commons. PM May is expected to make a statement on Brexit sometime today. Additionally, Commons Treasury Committee is holding hearings on the Bank of England’s (BoE) Inflation Report (10am). BoE Governor Carney is expected to speak alongside MPC colleagues Ramsden, Vlieghe and Haskel.

Over in Eurozone, the ECB’s Mersch (2:30pm) delivers a keynote speech on “FinTech and Digital Innovation: Regulation at the European Level and Beyond” in Brussels, while colleague Cœuré (7pm) appears at the annual dinner of the Working Group on Euro Risk-Free Rates in Frankfurt.

In macro data, we have US Building Permits/Housing Starts (1:30pm), both expected to have fallen in December, as well as S&P/Case-Shiller Home Prices (2pm), also seen weaker. Richmond Fed Manufacturing Index (3pm) could see a rebound after 2 months in negative territory. US Consumer Confidence (3pm) is expected to recover some recently lost ground in February.

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