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

UK 100 Index called to open +50pts at 6440, adding to last week’s gains and finally making headway above 6400 with the trend of rising lows from 16 Oct intact and sentiment buoyed by European bank Stress test results. The prospect of a bullish Inverse Head & Shoulders reversal looks closer with the 6400 neckline broken offering the chance of a 6730 target. Watch levels: bullish 6450, bearish 6370.

Bullishness rife this morning after a positive US close (earnings, macro data, shrugging off of Ebola), and a largely encouraging start to the week in Asia following results of the European Bank Stress tests as investors look ahead to the main event of the week - the Fed’s Monetary policy update. Do we see an end to QE or not?

Asian stocks mixed overnight with Greater China markets falling amid regulatory delays to a trading link between Hong Kong and Shanghai tempering gains elsewhere in the region, but volatility down on account of no big surprises from Europe’s bank stress test results. Global stocks look set to extend their rally.

ECB Bank stress tests and asset quality review pretty much as expected given Friday’s leaks, with 25 banks failing with a capital shortfall of €25bn of which 12 banks have already raised the €15bn required, while 2 Greek banks are exempt, leaving 11 banks needing to raise a net €10bn.

On its third attempt did the ECB get it right? Can trust be restored in the sector? Credit conditions to ease to help lending and growth? Sentiment buoyed by none of Europe’s top banks in trouble. The landmark review showed “most of Europe's banks will be purged of bad investments and ready to lend to businesses when the economy finally picks up”, the ECB said. UK banks still to be tested domestically, and BOE says more harshly.

While S&P upgraded Cyprus’ outlook to positive and S&P upgraded it to B+, Fitch has affirmed Spain and Italy at BBB+ Stable. Prepare for more sovereign debt rating updates following the Bank stress test results. Moody’s has yet to speak.

In focus today, we will no doubt have much analysis of the stress test results and whether they were too soft, again, and what it means for the region’s banking sector. Note Germany’s IFO criticising the failure to model a deflationary scenario which the region is tenuously close to.

Data-wise, we look to German IFO Business Surveys which are seen edging down (at odds with Friday’s PMIs), along with UK CBI Reported Sales. In the afternoon we have US PMI Services which is expected to fall back but remain well above 50, while US Pending Home Sales are seen rebounding in Sept and the Dallas Fed Manufacturing Index tick a little higher.

In commodities, safehaven Gold trades flat around $1230 on account of the revival in risk appetite but weakness still curbed by mix of physical demand and global uncertainty (growth, Ebola).

Oil prices stable from end-last week with WTI around $81 and Brent at $86 but with OPEC output, global growth outlook and the USD still driving the black stuff.

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

• Renishaw says expects Q1 revenue growth to continue in Q2
• Anglo American sends first iron ore cargo from Brazil project to China
• Mothercare says 94.6 pct of shares taken up in rights issue
• Randgold says taken remedial measures to overcome issues at Tongon
• Salamander says received conditional proposal from Ophir Energy
• Haversham looks to IPO on London's AIM
• Petra Diamonds first – quarter revenue rises 55 pct
• APR Energy Q3 revenue jumps 45 percent
• Ofgem approves lower funding for SSE Scotland cable