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

UK 100 Index called to open +10pts at 6930, of its last Friday lows of 6850 and nearing a challenge on falling highs around 6940 (3-day) and 6955 (2-week). Bulls need a break above the latter to break the more meaningful downtrend. Bears likely require a breach of 6900 to open the door for a test of support surround 6860. Watch levels: Bullish 6960, Bearish 6900

Calls for a positive open come in spite of Friday’s sharply negative close on Wall St and a mixed start to the week in Asia overnight as the US-China trade tiff continues to be pounced on by investors as an excuse to take risk off the table. Equities may be off their lows but the US Dollar remains under pressure, meaning reciprocal strength for major FX peers like the Yen, GBP and EUR which is hampering their respective equities (Nikkei, UK Index , DAX).

USD weakness and trade concerns are maintaining interest in Gold, while these two drivers and uncertainty about the latest White House appointee’s’ (military hawk) attitude towards the Middle East (notably Iran) are keeping oil prices up around recent highs. For the UK Index Oil Majors it’s a tug of war between the benefit for higher oil prices and hindrance of a stronger GBP. In Australia overnight, note weakness in financials and materials sectors and both tech and financials offside in Japan

Corporate news this morning, in terms of M&A, Dana has increased its offer for GKN's Driveline unit by $140m cash, while GKN retracts Sunday press quotes about shareholder support for GKN vs Melrose. Smurfit Kapp’s board has unanimously rejected higher offer from International Paper. JD Sports Fashion entered conditional acquisition agreement to acquire The Finish Line for $13.50/share cash; $558m.

Pennon expects FY 2018 results in-line with consensus but that expenditure at Glasgow energy recovery facility will be higher than planned. John Laing Infrastructure received 97% acceptance of 1-for-4 rights issue at 177p per share. Speedy Hire says FY adjusted pretax profit to beat expectations, despite liquidation of Carillion.

In focus today will be the continued fallout from Trump’s decision to go through with trade tariffs although the response from target China has been measured and rather nuanced thus far. Furthermore, exemptions on steel/aluminium tariffs have already been granted for other important trade partners (Canada, Mexico, EU), which suggests the US president is using this approach more for negotiating leverage rather than any real intention to start a global trade war.

Data-wise, French Q4 final GDP (7.45am) forecast to confirm a third quarter of sequential acceleration in growth, to its strongest since Q2 2011, echoing what we saw from Germany recently (4 quarters in a row; strongest since Q1 2014). Thereafter Feb UK BBA Home Loans (9.30am) may pull back after Jan’s jump, maintaining the slowdown since September.

This afternoon, while the US Chicago Fed Nat. Activity Index (1.30pm) may have risen off 4-month lows, the Dallas Fed (3.30pm) equivalent likely pulled back from its best since late 2005.

In terms of speakers, IMF Managing Director Lagarde (10am) speaks on “Strengthening the Euro Area Architecture” in Berlin, New York Fed President Dudley (5.30pm, voter, hawkish) talks about regulatory reform at the Chamber of Commerce in Washington and colleague Mester (9.30pm; voter, hawkish) speaks about monetary policy at Princeton University.

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