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

UK 100 called to open +5pts at 6270, holding on to its 6245-6280 range - extending it to 2 days - which bodes well in terms of consolidation of the recent rally and the Bulls keeping hold of the reins for a bullish flag breakout to 2016 highs of 6430. It also keeps us on track for completion of the final leg of May’s bullish triple-bottom reversal pattern to 6360. We are still watching for a break to send us one way or the other. Watch levels unchanged: Bullish 6285, Bearish 6240.

The positive opening call comes thanks to a positive Asian session as sentiment improved overnight in the wake of a lacklustre US close. The backtrack in oil below $50 and some nerves ahead of Janet Yellen’s speech may have held US bourses back, but poor prints for Japanese inflation (still deflation actually) and and a slowing in Chinese Industrial Profits growth, coupled with G7 comments, may have buoyed optimism about more stimulus.

Japan’s Nikkei higher on the prospect of a delayed sales tax hike and more stimulus after inflation data remained ugly (deflation). A softer US dollar is also helping metals prices and miners, offsetting energy sector weakness from the oil price drop back below $50. Australia’s ASX performing in-line with Japan and China.

US markets were largely flat with the Dow and S&P marginally down and the NASDAQ up a smidge. Energy names engaged in a bit of volatility as the oil price reversed back below the psyche $50 level. Fed governor Powell said he was up for a rate hike pretty soon, yet wasn’t sure about June just yet - more data needed, but at the moment the trend is a positive one after Durable Goods Orders, Initial Jobless Claims and Pending Home Sales beat expectations.

We can stomach a miss on Continuing Jobless Claims, since the US labour market has long proved itself resilient enough for the FOMC. So we’re still ‘rate hike positive,’  which has potential to weigh at least on the US into the weekend, especially if the USD Basket bounces up out of its current area of support at 95. This also likely to hamper commodity prices.

Indeed, Oil has already come back from its trip north of $50 as markets perhaps begin pricing in a forthcoming economic growth-checking bit of action from the US central bank. There’s also the issue of a forthcoming OPEC meeting on 2 June, at which it’s increasingly impossible that any kind of production freeze will be actioned - not only because it’s logically impossible anyway, but because the oil price has rallied  80% from its January lows.

Gold made an 8-week low in Asian trade but has since tentatively regained support at $1220. Still a slave to the USD, technicals and sensitive to US rate hike expectations.

In focus today will likely be Fed Chair Yellen’s speech after the European close, especially after her colleagues (mostly non-voters) were out in force this week swaying expectations about a Summer rate hike. Note, however, Yellen is only receiving an award from Harvard so may well swerve explicit mention of US monetary policy to avoid adding fuel to the fire.

Watch early trading for digestion of Chinese Industrial Production and Japanese inflation readings published overnight and their bearing on PBOC/BoJ policy/stimulus expectations.

In terms of data during the trading day, watch out this afternoon for the second read on US Q1 GDP. Given the sharp slowdown reported in the first estimate (0.5% vs 1.4% in Q4) and consensus hopes for a near doubling (to 0.9%) for the second estimate, this could well have ramifications on US Summer rate hike speculation.

Note expectations for an acceleration in US Personal Consumption growth, backing up that jump in Consumer Confidence we saw two weeks ago and this week’s strong housing reports. GDP inflation data is also seen confirming preliminary estimates while it will be interesting to see whether the Uni of Michigan Consumer Sentiment manages to hold up after the aforementioned jump higher two weeks ago.

As always the US Baker Hughes Rig Count is of interest after the European close for clues about whether US producers (Shale/frackers) are coming back online thanks to a higher and more viable oil price. Or are we still seeing rigs being mothballed and US production on the wane, helping with the global supply/demand rebalancing?

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – it’s all part of the service.

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

• Kcom says FY operating profit £91.8m
• Bodycote says revenue for four months to April 30 -4.9%
• Anglo American appoints Bruce Cleaver CEO of De Beers
• Arbuthnot says to sell about 5.8m shares in Secure Trust
• Goals Soccer Centres appoints Mark Jones as CEO
• Axa sells UK business to Phoenix Group, to book €400m loss
• Watchstone says overall current trading in line with expectations
• KCOM says CFO Paul Simpson to leave this year
• AstraZeneca announces positive results in breast cancer trial
• AstraZeneca potassium drug delayed by manufacturing snag
• London copper eyes biggest monthly drop since November
• Ultra Electronics Sells Global ID Business for up to £25M