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

UK 100 called to open -5pts at 6745, still holding its July uptrend of rising lows but wrestling with a slower pace of advance as its move towards the apex of what could turn out to be a bearish rising wedge. Nonetheless, a daily RSI not yet overbought suggests potential for further upside, evident via last night’s brief foray to 6780. The Bulls will be looking for any break above 6750 while Bears watch for any signs the uptrend is in jeopardy, which would likely require for 6720 to see a meaningful test. Watch levels: Bullish 6755, Bearish 6720.

A flat opening call comes after Asian stocks delivered a mixed session, echoing their US counterparts with the US Fed’s July update leaving investors a little uncertain about the path for US monetary policy normalisation. US data has been solid, perhaps warranting a hike in September, and it says external risks have receded, but peers are in a very different world, adding to stimulus and the outlook remains unclear, especially given what corporates are saying amid the plethora of UK, EU and US companies reporting this week.

A weaker Dollar resulting from odds of a September rate hike falling helped the Yen strengthen to the detriment of Nikkei exporters, despite expectations that the BoJ is set to add to the government's bumper stimulus package tomorrow. Or might it hold off like the ECB until September, waiting to see what the BoE does next week in light of Brexit? Australia’s ASX is just positive, deriving some benefit from a weaker USD helping the metals and energy space (watch the Miners and Oil majors this morning).

US markets closed mixed after an FOMC statement that was a little less hawkish than markets had expected, such that they didn’t really know what to do with themselves. Rates kept as is, as expected, and no indication of a rate hike timetable although a rate hike in 2016 was kept on the table. The really heavy stuff came with an upgrade to the Fed’s economic outlook which said that near-term risks had receded. However this was balanced by the need to keep a close eye on external factors such as widespread geopolitical issues and sub-par inflation.

We’re back to where we were yesterday morning in terms of US equities although with a weaker USD this gives hope to market bulls looking for new highs. Note Durable Goods Orders disappointed yesterday, but the print is known for its volatile behaviour.

Dollar-sensitive Gold has posted overnight gains with a strong move up above $1335 as the 50- and 200-hour moving averages make a bullish cross.

A surprise weekly 1.67m barrel build-up of Crude at US storage facilities saw big declines in oil prices, this adding to an existing gasoline glut (3rd consecutive week of growth). Both Brent and WTI are in consolidation mode ahead of another leg down which could see the markers fall back towards  $40.

Focus today will be on last night’s US Fed monetary policy update. A less hawkish tone than expected, in the face of recent stateside data strength and post-Brexit calm still leaves the door ajar for another US hike this year (September? December? We doubt it still). However, this would remain in stark contrast to global peers doing the exact opposite - boosting stimulus - effectively doing the Fed’s work for it, the reciprocal of their action keeping the USD strong, tightening policy indirectly.

Data-wise, German Unemployment is seen almost unchanged in July, however, any deviation from consensus could influence the DAX. The same is true for Eurozone Confidence figures which are expected a shade lower in July, which is understandable in light of the UK's Brexit vote. Any marked improvement in German Consumer Price Inflation (CPI) would surely be music to ECB President Draghi’s ears as he wills the Eurozone out of deflation.

Stateside, watch out for the Kansas City Fed Manufacturing emulating its Dallas and Richmond Fed counterparts with a bigger than expected July rebound this week which could boost sentiment for US equities and give a fillip to Wall Street as we move towards the European close. Note also that the ECB’s Costa and Coeure are both speaking.

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

• SoftBank Q1 profit flat, signs of sharp Sprint recovery seen
• Weak sterling pushes Schroders assets to record high in H1
• Lloyds plans 3,000 jobs cull, fresh branch closures after Brexit shock
• Lloyds warns capital generation may be lower in future years
• Smith & Nephew buoyed by sports medicine but China weak
• BAE Systems on track to grow 2016 earnings by up to 10 pct
• Countrywide warns on results as Brexit hits property market
• British American Tobacco sales rise, says profit growth to be weighted to second half of year
• Shell Q2 profits fall more than 70 pct
• Sky's full – year adjusted operating profit rises 12 pct
• Anglo American says net debt at June 30 fell to $11.7 bln, on track for less than $10 bln
• UK's Centrica loses 399,000 customers in the first half of 2016
• Diageo returns to sales growth in line with estimates
• UK's Merlin says recent trading shows continuation of trends
• AstraZeneca earnings hit by waning cholesterol drug sales
• UK house price growth edges up, Brexit impact yet to be seen – Nationwide
• Credit Suisse CEO says bank in perfectly adequate capital position, posts surprise Q2 profit of 170 mln
• Oil edges away from April lows but oversupply still weighs