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

UK 100 Index called to open +90pts at 6980, extending yesterday's rebound to break above 9650 overnight. Bulls are eyeing a break above 7000 to open the door for a challenge on falling highs resistance just shy of 7100, dating back to the end-Jan market peak. Bears need a break back below 6955. Watch levels: Bullish 6990, Bearish 6970

Calls for a positive open come after Wall St posted its biggest one-day gain since 2015 on increased hopes that the US and China would work to side-step an outright trade war (China to buy more semiconductors from the US?), and that US talks with other countries were proving productive (exemptions, workarounds), allowing Asian bourses to take the baton of bullish sentiment overnight. Fresh M&A helping too.

Oil prices remain strong on a combination of geopolitical uncertainty (Russia diplomats being expelled, Iran nuclear violation), weaker USD and belief in OPEC/NOPEC production cut compliance offsetting rising US output. Gold buoyed by the same weak USD, safeh aven demand amid persistent global uncertainty, and perhaps demand for an inflation hedge as central banks step further towards policy normalisation.

Corporate news this morning, in terms of M&A; GlaxoSmithKline to buy-out Novartis’ 36.5% stake in 2015 Consumer Healthcare JV for $13bn cash, accretive/cash flow beneficial from 2018; strategic review of Horlicks brand and other consumer nutrition products. Melrose Industries assures government it will keep UK HQ and London listing for 5yrs; GKN Aerospace and Driveline to retain rights/trademarks; GKN R&D to be maintained >2.2%.

Ferguson H1 revenues +10.3% (+9% constant FX, +7.4% organic), ongoing trading profit +15%, pretax profits +7.5%, dividend +10%; US strong, Canada healthy, UK challenging; $4/share ($1bn special dividend) + accompanying share consolidation after sale of Stark.  United Utilities trading in-line, expects FY revenues up slightly, operating profit moderately higher, CAPEX increased in H2, higher RPI to increase interest costs, net debt to be higher on investments.

Galliford Try says 1-for-3 £157.6m rights issue at 568p/share (32.8% discount) is fully underwritten. Dixons Carphone appointments Jonny Mason as Group Finance Director from Halfords. Superdry co-founder Julian Dunkerton to step down and donate £1.2m shares to Blue Marine foundation. Stagecoach says expectations for adjusted FY EPS unchanged since Dec interim results.

AG Baar says “UK economic landscape expected to remain uncertain for business as a whole, with regulation, changing customer dynamics and consumer preferences adding further volatility for the soft drinks industry”.

In focus today will be data including Spanish Consumer Price Inflation (CPI; 8am), forecast to extend its pick-up from Jan 0.6% lows to revisit last Jun-Nov’s 1.5% average. Eurozone Confidence surveys (10am) rarely deliver any fireworks although consensus is looking for a slight pullback across the board. Watch EUR and DAX.

This afternoon’s US House Prices (2pm) could sway thoughts about US consumer confidence, especially if even slower than the continued tapering of growth pencilled in by consensus. Thereafter, official US Consumer Confidence (3pm) may have edged higher in contrast to the Richmond Fed Manufacturing Index (3pm) dropping like Dallas yesterday, albeit normalising from Feb’s jump. Watch USD and Dow/S&P.

Minutes from the Bank of England’s Financial Policy Committee (FPC) are out at 9.30am, offering thoughts on the latest meeting on UK financial system stability. Central Bank speakers today include the ECB’s Nowotny (10am) and the Fed’s Bostic (4pm).

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