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

UK 100 Index called to open +35pts at 7425 (ex-divs -2.3pts), having extended its rebound from 7380 June lows to challenge a 2-week trend of falling highs resistance at 7430. Bulls need a break above 7435 overnight highs to open the door for a rally back to 7480/7560/7600. Bears hope the index loses steam here, turning south for another test of support. Watch levels: Bullish 7435, Bearish 7420.

A positive opening call comes after US bourses closed higher (Tech outperforming) and Asian equities took the baton overnight as financials welcome news of US banks having pay-out plans (dividends, buybacks; +50% YoY) approved by the US Federal Reserve. Further gains for Oil, taking the rebound to 7%, and metals fuelled by USD weakness is also helping sentiment towards index heavyweights.

Note further USD weakness (Dollar index near 9-month lows) derived from a combination of US scepticism and a strong GBP + EUR (hawkish BoE+ECB comment; 3-week and 14-month highs, respectively vs USD), although not yet proving the usual hindrance to wither the UK UK Index or German DAX.

Australia’s ASX is outperforming thanks to Financials (US bank stress tests), Energy (oil) and Miners (metals up on weak USD and extension of a more positive China view). Japan’s Nikkei is also higher, although not to the same extend, thanks to Financials and Energy. Chinese equities are holding around 18-month highs.

US equity markets rallied sharply yesterday after the Federal Reserve approved a range of pay-outs from the country’s six largest lenders. Financial behemoth Goldman Sachs led the Dow Jones 140 points higher, while the S&P500 recorded its best single session since April on strength in the Financial sector. Tech rebounded amongst the market bullishness, helping the Nasdaq to outperform, gaining 1.4%.

Crude Oil prices have extended their rally after yesterday’s US EIA inventory figures overnight, aided further by the ongoing US dollar sell-off. Brent crude is trading at its highest level since 19 June, although its overnight rally has slowed having reached resistance at $47.60, a breakout from which could see the global benchmark return to a $49/barrel handle. US crude eyes $45 resistance on the upside for a potential return to $47.

Amidst the conflicting central bank rhetoric, Gold has continued to trade within its $1246-$1254 trading range, underpinned by rising lows support since Tuesday as the US dollar continues to slide. Having twice failed to overcome $1253 overnight, the precious metal has turned back towards rising lows support at $1250. Further greenback weakness could see the yellow metal rebound for another test of the key level having been unable to overcome it six times so far this week.

In focus today, after a run of weak US ‘hard’ data, will be the final read for US Q1 GDP (1.30pm), expected to be confirmed sharply lower again (1.2% QoQ vs Q1 2.1% vs Q4 3.5%), although price growth may have improved (notably core) to maintain levels which - coupled with a strong jobs situation - the Fed sees warranting further rate rises and policy normalisation.

Other data releases of note include UK Mortgage Approvals (9:30am) expected largely flat after BBA data on Monday. After the BoE stoked consumer credit fears this week, a better or worse print generate a reaction from the UK Index ’s Housebuilders.

Eurozone Confidence Indicators (10am) will be looked to echo Monday’s strong German IFO prints. While Consumer confidence is seen confirmed at -1.3, and Economic and Industrial indicators are seen standing pat, the Services segment is expected to retreat, while Business Climate segment is seen marginally improving in June after dipping from 6-year highs last month.

This afternoon, German CPI (1pm) is seen extending its retracement from the ECB’s inflation target of 2% last touched in April, expected to come in marginally weaker at 1.4% on an annual basis, while returning to flat in June after negative growth in May.

Today is also day two of voting on the UK Government’s Queen’s Speech Bill. Having only very narrowly defeated Labour’s motion to remove a 1% public sector pay cap yesterday, Theresa May’s government now faces a second one focused on guaranteeing a more ‘job-friendly’ Brexit. The opposition hopes that pro-EU members of the minority ruling Conservative party vote against the government, however with their position already on shaky ground, this looks unlikely.

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

• Wood Group wins multi – million dollar Husky Energy contract
• Wood Group sees weaker than expected H1, hurt by fewer orders
• Purplebricks Group says FY group revenue up 151% to £46.7m
• DS Smith to buy 80% of U.S. packaging firm Interstate Resources for $920m
• Tesco now looking for completion of Booker takeover in Jan 2018
• AstraZeneca, Chi-Med take kidney cancer drug into final testing
• Stobart says group is trading in line with board's expectations
• Greene King's full – year adj pretax profit rises 6.6%
• UK regulator to investigate PWC's audits of BT after Italian scandal
• JD Sports says on track to hit full – year targets
• Rio Tinto shareholders approve $2.69bn coal assets sale to China–backed Yancoal
• SEC probes Barclays, Morgan Stanley bankers on Puerto Rico bonds – Bloomberg
• Gold inches up as dollar tumbles to lowest since Oct
• London copper touches highest since April as dollar falls
• Oil rises for 6th session, buoyed by US output decline.