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

UK 100 Index called to open -45pts at 6050, in retreat from Friday’s test of 6100 and attempt to revisit end-Jan highs of 6130. Whilst still in an uptrend from mid-month lows of 5500, the pace of gains has slowed. As expected, the ceiling of the 3-month falling channel served to hinder progress at 6120, which also corresponds with end-Jan highs and 38.2% Fibonacci retracement of the declines from April 2015. Note falling highs since Friday’s best levels which have ushered the index back below Friday’s lows. Watch levels: Bullish 6070, Bearish 6035.

The negative opening call as stocks in Asia start the weak on the back foot after the Shanghai G20 meeting of finance ministers failed to deliver anything concrete in terms of stimulus to spur global growth. Reappraisal of US monetary policy direction after digestion of some encouraging US data is also weighing along with Copper giving up ground along with Oil - back below the technical resistance levels it tested to the upside last week to make multi-week highs.

Also weighing are declines by Chinese stocks (near 15-month lows) after the PBOC set the Yuan currency weaker for the fifth straight session and by the most since early Jan (despite suggesting at the G20 meeting that there was no basis for persistent depreciation) while the Japanese Yen (JPY) retraced much of Friday’s welcome weakness to hinder Nikkei exporters also dented by mixed Industrial Production and soft Retail Trade data. Australia’s ASX outperforming at breakeven.

US stocks closed mixed on Friday, again tracking oil price volatility and pressured by a strengthening USD following better than expected macro-data (Q4 GDP revised up to +1.0% from +0.7%, personal spending at 8-month highs, core PCE rising at fastest pace since Jul 2014 and Uni. of Michigan Sentiment revised up to 91.7 in Feb).

We heard from the Fed’s Mester who sang from the hawks’ hymn sheet, supported by the above data, saying she thought a rate hike should be on the table at the March meeting. Meanwhile, Brainard balanced things by saying that a softer path of tightening would be inevitable if overseas headwinds persist, while the market’s expectations for inflation also merit attention.

Note that, in addition to the usual Fed chat, we also had some from well-known market watcher Raoul Pal who told CNBC the US economy is already in its next recession, and that the Fed is essentially powerless to prevent it, citing recent talk of negative rates and suggesting that’s indicative of future policy.

In focus today we have UK Mortgage Lending for clues on the key housing market. Eurozone Consumer Price inflation estimated flat in Feb with core edging back, significant after a weak German print last week. In the afternoon, US data includes Chicago PMI (down) and Pending Home Sales (rebound) and a Dallas Fed (negative, but improved).

Crude prices have retraced gains of late last week, with Brent and WTI both in danger of slipping back beneath those 3-month falling highs today. That, of course, depends on whether traders decide to focus on the status quo (continued global oversupply, no sign of production freezes, US shale merely lying dormant) or what may come out of a proposed March OPEC meeting (some sort of agreement which may or may not lead to output controls).  Note the IEA saying current oil market conditions aren’t suggestive of an imminent sharp recovery in the oil price.

Gold has edged higher over the weekend and remains boosted this morning in Asian trading, following a down day on Friday as equities benefited from US economic confidence and encouraging Chinese rhetoric around the G20 meeting.

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

• WM Morrison Supermarkets Inks Supply Pact With Amazon
• Hiscox Reports Rise in 2015 Earnings
• OneSavings Bank Acquires UK Mortgage Portfolio
• Keller Earnings Rise
• Polymetal Reaffirms 2016-2019 Output Target, Sets 2020 Target
• Ultra Electronics 2015 Pretax Profit Rises; Wins $14.25M Contract
• Ocado Group In principle agreement with Morrisons