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

UK 100 called to open -25pts at 7125, having bounced off October intersecting rising support at 7100 but still in a 2-week down channel from 2019 highs of 7262. Bulls need a break above 7155 falling highs, Bears a breach of 7105 rising support. Watch levels: Bullish 7155, Bearish 7105

Calls for a negative open come after Wall St swung marginally lower following dovish comments from Fed Chair Powell, who reiterated Fed’s “patient” stance. Powell’s comments sent the USD to 3-week lows and, in conjunction with the increasing likelihood of Brexit delay, the GBP is strong, hampering the UK Index ’s large international cohort.

An escalation of military hostilities also continues between nuclear powers India and Pakistan, with the latter reportedly shooting down two Indian planes and arresting the pilots.

Oil prices are lower in spite of API report showing an unexpectedly large crude oil draw of -4.2m (vs. +2.8m est./+1.26m prev.). This comes after CME Globex, the key global commodity exchange, experienced an overnight outage, leading to erratic volatility. Trading has now resumed.

In corporate news this morning, Marks & Spencer announces £600m rights issue to fund JV with Ocado, buying 50% of Ocado retail business for up to £750m, sees synergies of £70m+/year by 3rd year after completion. Cuts final dividend -40% to sustainable level (7.1p/share). Trading in-line.

Rio Tinto FY underlying earnings $8.8B (+2%) beats $8.5B estimates; final dividend flat at $1.80, special dividend $2.43 ($4B) ahead of expectations. Looking at M&A; iron-ore still focused on value over volume; Steel resilient, Bauxite uncertain; New gold deposit found in Australia.

Weir Group FY like-for-like revenues and orders +15%, operating profit +13%, pre-tax profit +22%, operating cash-flow +86%, net debt +33%, dividend +5%; Expects further growth in 2019.

After-hours Metro Bank reported an FCA/PRA investigation into recent Risk-Weighted Assets accounting error. Cuts medium-term guidance: Deposits +20%/year vs. +34% in 2018, cuts store growth plans significantly. FY18 revenues +38%, underlying pre-tax profit +140%, Net Interest Margin -12bps, customer NIM+fees -2bps. Confirmed plans to raise £350m via rights issue.

Taylor Wimpey FY revenue +2.9%, in-line, pre-tax profit +5.5%, tangible NAV/share +2.7%, net cash +25.8%. Forward UK order book +9.4% (+16.3% in units). Positive 2019 start. Net private sales rate 0.99 YTD (vs. 0.82 in 2018). To pay £600m (+20.1%) in dividends in 2019 o/w ordinary +56% (~£250m) & special +2.9% (~£350m). Sees stable 2019 sales and build cost growth.

ITV FY total revenues +3%, in-line, (ads +1%, non-ads +5%), adj. EBITDA -4%, dividend +3%, net debt -2%. Expects continued double-digit online revenue growth, but H1 impacted (first 4 months -3-4%) by tough comparable (2018 World Cup). Sensitive to UK ad headwinds. In talks with BBC about a strategic partnership.

In testimony to US Senate, CEO of AstraZeneca said if drug-pricing system overhauled it could offer the same discounts/rebates it does to insurers (less fees). Experian abandons £275M acquisition of Clearscore; doesn't expect CMA approval. Ted Baker issues 2019 profits warning due to additional costs and inventory write-down.

St James Place 2018 operating profit +9%, underlying cash earnings +10%, final dividend +20%, gross inflows +7.5%, net inflows +8.4%, Funds Under Management +5.4%; FUM currently £102B. SSE pays £705K over Feed-in Tariff misreporting having overstated generation payments in an administrative error within annual submissions to Ofgem.

GVC signs long-term partnership agreement with Playtech, giving GVC gambling platforms access to Playtech content and software products. Playtech FY adj. EBITDA guidance unchanged. MSCI has clarified it will delete IAG from the MSCI Global Investable Market Indexes from 1 Mar after its decision to halt share sales to non-EU citizens. UK Index Russell said no impact on its indices.

In focus today will be the second day of testimony from Fed Chair Powell (3pm), appearing before the House of Representatives’ Finance Committee. Traders should also watch the ongoing Brexit debate in the UK House of Commons where developments have propelled GBP to 4-month highs.

US President Trump and North Korean leader Kim kick off a two-day summit in Vietnam, the goal being to de-nuclearise North Korea and promote better relations between rivals. The NY Times raised the possibility that the two leaders may announce a formal end to the 1950-1953 Korean War and work toward a signed peace treaty.

In other events and speakers, the ECB’s Cœuré (8:30pm) speaks at the joint ECB, Bundesbank and Chicago Fed risk management conference in Frankfurt. Colleague and Bundesbank überhawk-in-chief Weidmann (10am) presents the Bundesbank 2018 Annual Report.

Macro data releases today include Eurozone sentiment indicators (10am), with consumer confidence expected to confirm another pullback from December’s 1.5-year lows. US Factory Orders (3pm) are likely to rebound in December, while DOE Oil Inventories (3:30pm) could show another crude oil build, albeit a less than last week.

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