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

UK 100 called to open +90pts at 6070, holding its uptrend from yesterday’s lows. Well off Friday’s worst levels and having registered a breakout beyond short-term falling highs resistance, markets appear to have calmed into 6000: the mid-point of pre and post-Brexit best and worst. Bulls are looking for a break above yesterday’s 6130 highs to keep recovery alive. Bears are eyeing any break of rising lows and 6000 in the hope of further downside. Watch levels: Bullish 6075, Bearish 5990.

A positive opening call comes in spite of a mixed Asian session and negative US close after ratings agencies S&P and Fitch joined Moody’s in downgrading the UK’s credit rating post Brexit. This and political woes sent GBP to fresh lows overnight but it has since bounced, strengthening for the first time since Friday’s surprise referendum result on hopes policymakers are working to limit the economic fallout. An easing in USD strength is serving to buoy the all-important commodities space while some cautious optimism is creeping back into the new trading week.

In Asia, Japanese equities are trading around breakeven benefiting from bets of more stimulus and USD/JPY holding around 102, with the overnight GBP bounce giving a breather to Nikkei exporters via a weaker Yen, having been under pressure for several days on account of global FX moves post Brexit. Note Australia’s ASX not benefiting from the weaker USD's help for commodities due to the equally important financials sector being troubled by Brexit contagion fears.

US markets closed yesterday’s session in the red once more, nursing heavy losses in risk sectors such as commodities and financials. Note, however, Dow Jones futures currently indicate a positive open for today’s session as markets consolidate. While the general outlook remains bleak, profit taking and bargain hunting are likely to keep things moving in both directions.

Crude prices ticked up overnights with the USD Basket off its high point, in an area of resistance at 2016 falling highs, helping to boost demand. Expect economists’ outlooks over the coming days and weeks to dictate the direction of oil, however a longer term slowdown in demand is seen as unlikely.

Gold came back slightly from its highs overnight as Sterling stabilised - briefly no doubt - to return an air of calm to the markets. However, note support likely to remain for the yellow metal on continued safe haven demand amid all the uncertainty around the surprise Brexit vote.

In focus today will be the EU Leaders Summit on Brexit from which all soundbites will be listened to carefully for any hints of pressure from Brussels or that we are set for an even longer and more drawn out process than we have been preparing for. What ECB President Draghi has to say may also be of interest in terms of keeping market calm.

Data-wise, UK CBI Sales may show a surprise improvement like CBI orders data did last week. In the afternoon, US Q1 GDP Growth (3rd estimate) is seen a touch faster along with Personal Consumption, although inflationary prints are seen unchanged from the 2nd estimate. Thereafter, US S&P House Prices are likely to have made solid gains in April, along with improvements in Consumer Confidence and the Richmond Fed Manufacturing although we note that the Kansas City Fed improved last week while the Chicago Fed disappointed .

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

• British bank Shawbrook to take $12 mln charge, CFO Wood to leave
• Liquid Telecom, Royal Bafokeng to buy Neotel for $429 mln
• Ocado profit rises, talks with potential overseas partners continue
• Legal & General says balance sheet resilient in face of Brexit volatility
• Legal & General appoints Whitehall veteran John Kingman as group chairman
• Rolls Royce says on track to meet guidance
• Fire under control at BP Pascagoula, Mississippi gas plant – police
• British government puts sale of RBS, Lloyds stakes on hold after Brexit vote
• France's Total wins stake in Qatar's Al – Shaheen oil field
• Pfizer to invest $350 mln in China biotech hub, first in Asia
• Redrow sees profit above expectations on steady housing demand
• Wood Group Awarded Peregrino Field Wellhead Platform C Contract