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

UK 100 called to open +15pts at 6740, with rising lows since Jul 6 holding firm through 6705. Another test of 6755 resistance could see 6800 revisited quickly to make fresh 12-month highs. This would maintain the impressive bullish post-Brexit rebound. Bears are keeping watch for any hints of weakness around 6720-30, hoping the index is merely topping out since mid-month, preparing for a reversal. Watch levels: Bullish 6760, Bearish 6715.

A positive opening call comes amid hopes of a bumper stimulus package (both fiscal and monetary; ¥‎28tn/$265bn) from Japan to prop up its flagging economy. This would keep firmly open the easy policy taps, something equity markets have come to love by depressed bond yields leaving investors with little choice but to rush towards equities.

Nikkei stocks (exporters in particular) are outperforming thanks to a weaker Yen (money printing devalues the currency). Elsewhere, markets are on watch for any hawkish rhetoric from the Fed this evening in light of recent solid US data and of course those all-important Eurozone bank stress tests. Australia's ASX is breakeven following disappointing inflation numbers while China is down sharply despite better Industrial Production data after Consumer Sentiment edged lower.

US equities should be quiet ahead of the FOMC announcement at 19:00 at which point traders should wake up and start, well, trading. Note that a more hawkish tone will likely see markets either have a tantrum (cheap money for not much longer - harrumph!) or make fresh all-time highs (US economy in great shape, woohoo!)

A generally tepid US earnings season chugged onwards overnight as Apple impressed (shares up 5%) with sales of iPhones beating forecasts. Evidently the kids are still foaming at the mouth for the latest model - you know, the one that’s a slightly lighter shade of rose gold.  Twitter’s results, on the other hand,  missed (shares down 8%) as the company continues to shuffle around in the dark for a way to actually make money.

Crude prices are still under pressure from worries about US gasoline inventories, despite still falling crude stockpiles which could simply indicate a fast stream of oil being fed into the refining system, rather than a reduction in upstream crude production. Still, given this situation it’s hard to see this imbalance continuing for too much longer. Weeks maybe.

Gold is adrift ahead of this afternoon’s potentially USD-moving Fed announcement. The Dollar could well have a short-term snap back given that it’s likely been pricing in a more hawkish message already, though note of course that any direct mention of a future rate hike timetable and/or talk of a trend of good US data could see further USD advances. All this, of course, will dictate direction for the yellow metal.

In focus today we have UK Q2 GDP (advance reading) at 9.30am. Economists predict a slight acceleration in growth to 0.5% for the quarter and 2.1% annualised, which may inspire UK equities, up from 0.4% and 2.0%, respectively, last quarter. June may have been slightly impacted by the run-up to the Brexit, but it is unlikely that much evidence of a slowdown is evident just yet.

That said, the UK Index of Services (circa 75% of the UK economy; including Finance) is expected to have stalled in May (April was strong but merely reversed a negative March). Slower growth may fuel Brexit fears after last week’s saw UK PMI Services growth contract for the first time in over 5 years.

This afternoon US Durable Goods Orders (notoriously volatile) are forecast retreating in June which may dent US equities, but a rebound is seen when chunky transport (e.g. aircraft, ships) is excluded. Following strong New Home Sales (7yr high) yesterday, suggesting consumer confidence, Pending Home Sales are also expected to have rebounded in June rebound.

Traders exposed to Oil will be watchful of US DOE Oil Inventories after another last night’s API data disappointed with a mere 800K barrel drawdown (lower than last week’s -2.3m) coupled with a 1.4m barrel rise in strategic inventories at Cushing, Oklahoma. This served to stifle a rebound by US and Brent Crude from their lows of yesterday.

To close the day, overnight central bank risk lurks in the form of the US Fed’s latest monetary policy update. It wants to hike rates but can’t really justify it while peers (BoJ, BoE and ECB) do quite the opposite, experimenting with ever-negative rates and increasingly innovative stimulus measures.

US data may continue to impress, however, the more stimulus peers deliver, weakening their own currencies, effectively tightens stateside policy by strengthening the USD. Doing the Fed’s work for it. Expect plenty of hawkish rhetoric as usual, just to keep us all in check, but we still say it won’t hike until next year. Unless they deliver an early Christmas present again. This year is looking rather similar.

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

• Rentokil signs deal with Google and PA Consulting Group
• Metro Bank says half – yearly revenue up 63 pct
• Jupiter CEO says fund flows positive since end of June
• Antofagasta sees FY copper production at lower – end of forecast
• Rathbone Brothers H1 underlying pretax profit down 5.1 pct
• McColl's Retail Group says half – yearly rev up 2.2 pct
• St James's Place CEO says business as usual after Brexit vote, H1 operating profit at 284 mln stg
• Renishaw FY pretax profit down c.45 pct
• GlaxoSmithKline invests $360 mln in post – Brexit UK manufacturing
• Rightmove says property transactions fell ahead of EU vote
• Airbus CEO says on track to meet 2016 order target
• Capita says uncertainty up after Brexit; decisions delayed
• Tullow Oil returns to profit in first half
• Housebuilder Taylor Wimpey says Brexit vote yet to hit demand
• ITV sees ad revenues ahead of market view, to cut costs
• ARM, soon to be bought by Softbank, posts Q2 profit rise
• Brewin Dolphin increased discretionary funds to £26.8 bn in Q3
• UK's 3i sees total returns of 16.4 pct in Q1 results
• Spain's Santander says H1 net interest income 15.2 bln eur