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

UK 100 Index called to open +15pts at 7305, back from a bullish test of recent 7320 resistance, getting as high as 7340 overnight, but still in a rising channel towards 7400. Bulls need a break above 7320; Bears require a breach of overnight lows at 7302. Watch levels: Bullish 7320, Bearish 7302

Calls for a positive start echo a sharply higher finish on Wall Street overnight and in spite of a mixed Asian session (Japan strong; Australia positive; China lower). All eyes on Jay Powell’s debut as Fed Chair before Congress this afternoon, with potential to move the USD, while key Brexit speeches from the EU’s Barnier and the UK’s Fox may move EUR and/or GBP. Currency impact could in fact prove the major driver of sentiment today, whilst a deluge of corporate earnings look set to produce an exciting open.

Corporate news this morning: Standard Chartered resumes dividends, FY loan impairments fall by almost half, pre-tax profit doubles but return to net profit misses consensus. Comcast offers 1250p cash for Sky, 16% premium to Fox proposal; claims free cash flow accretive in year one. GKN results in-line with guidance; revs up, profits lower, dividend +5%, to formally separate Aerospace and Driveline into two listed companies via demerger in mid -2019.

Persimmon FY revenues +9%, underlying PBT +25%, Completions +5.7%, Average selling price +3.2%, forward sales +7.5%, confirms 110p final dividend and 125p special per year for 3 years, more than doubling the original plan for capital returns. Fresnillo FY Silver production +16.6%, Gold -2.6%, Revenues +9.9%, PBT +3.2%, forecasts higher Silver but lower Gold production in 2018.

Croda FY17 in-line, Sales +10.4% (+4.6% at constant FX), adjusted PBT +11.1% (+6.5%); confident into 2018. Direct Line final div +40%, special div +50%, Gross Written premiums +3.6%, PBT +52.7%, reiterates 15% return on equity target, aims for net investment yield of 2.1% in 2018. Virgin Money FY PBT +35%, underlying +28%, net income +14%, final div +17%, CT1 ratio 13.8%; expects to maintain double-digit returns and a progressive dividend in 2018

Provident Financial launches £331m 17-for-24 rights issue (105m new shares at 315p; 46% discount), reaches FCA settlement over repayment plan product, £172m provision, £134m net loss. Meggitt says 2017 profit +34%, sees more growth ahead (revs +2-4%, margins +200bp), div +4.8%. Trafalgar New Homes to buy Beaufort Homes with new shares.

US equity markets continued their climb higher yesterday, with the Dow Jones climbing 1.6% as Industrial names (3M, Boeing) provided significant gains. Meanwhile, the S&P 500 climbed 1.2% as Telecoms, Financial and Technology sectors outperformed. Telecoms rallied on further Qualcomm/Broadcom M&A chatter, Financials after Berkshire Hathaway Chairman Buffett appeared on CNBC and Tech with all ‘FAANG’ stocks returning to their pre-correction levels. This helped the Tech-heavy Nasdaq to also rally by 1.2%.

Gold is rallying from $1331 rising lows support after the US dollar basket retreats from another failed challenge of the 90 mark, the second time this has happened in under a week. However, the precious metal remains under pressure from a duo of resistance at $1335 (falling highs) and $1337 (intersecting). The US dollar reaction to Fed Chair Powell’s Congressional testimony today will be a key driver of sentiment today.

Crude Oil benchmarks have retreated from overnight 3-week highs, despite a weaker US dollar, however remain in strong rising channels. Global benchmark Brent has retreated from $67.9 highs, although remains a distance from $67.2 rising lows support, while US crude has fallen from its $64.3 highs, although it too trades a way off support at $63.6.

In focus this morning will be February Eurozone Confidence indicators (10am) which are forecast falling from/further from recent highs. This afternoon, German inflation (1pm) should have improved this month, but slowed over the year. Watch the EUR.

US Durable Goods (1.30pm) look set to deliver a seasonal beginning-of-quarter slow-down, although ex-transport may have held up well. US House Price (2pm) growth is expected pretty stable in Dec, along with US Consumer Confidence (3pm) and the Richmond Fed (3pm). All could move the USD and/or US stocks/indices.

Speaker-wise, the pick of proceedings will be day one of new Fed Chair Jerome Powell’s inaugural bi-annual congressional testimony. Text released 1:30pm; grilling from 3pm. Will he follow in Yellen footsteps with a cautiously hawkish stance, dial it back even, or step it up? Watch the USD.

After UK opposition Leader Corbyn took a softer stance on Brexit yesterday, listen out for what UK Trade Minister Fox and the EU Chief Brexit Negotiator Barnier have to say today. Both could add fuel to the fire of already heated negotiations (and move EUR and GBP) before UK PM May’s Friday address, from which markets want a clearer idea of what Brexit will actually look like.

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