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

UK 100 Index called to open -10pts at 6425, holding its uptrend from September lows and rising channel from early October. However, concern rising at recent price activity in a rising wedge formation which is bearish and could lead to a reversal. However, any break above 6460 could scupper this and revive hopes of upside to 6550 or better. Updated watch levels: Bullish 6460, Bearish 6315.

The negative open comes after the Fed delivered a more hawkish policy update than expected, talking of moderate US growth and omitting previous references to global headwinds. While revised language and explicit reference to December’s meeting has markets in a tizz, we still don’t expect anything until well into 2016.

Global data remains mixed and risks remain (hence central bank peer action). Furthermore, December is the only meeting left for the Fed to refer to in 2015 and serves to keep market expectations in check about both a hike and looser policy for longer. While US markets rallied, the question is whether they did so on improved economic assessment, or non-belief in a December move and relief at the cheap money for longer? And while the Fed removed talk of global risks, something linked to China over the summer, note the worlds #2 economy highlighting a revised minimum GDP growth estimate of 6.5% for the next five years which may signal willingness to accept lower growth whilst maintaining a ‘moderately prosperous’ economy. Stimulus to ensure it, or just more questionable data?

Asian bourses mixed after the positive US close with fears of as US rate hike by year-end putting paid to October gains, while stronger Japanese Industrial Production calmed hopes of additional stimulus being required by the BoJ tonight. Results from Samsung showed welcome growth, even if it missed expectations, and markets were more excited by a $10bn share buyback. Aussie stocks hindered most with a stronger USD hampering commodities and many of the dual-listed miners.

Wall Street obediently posted good gains in a volatile session yesterday (seeing past a pseudo-hawkish Federal Reserve?), while M&A chat materialised in the FT - again in the pharmaceuticals sector. This time it’s Pfizer holding preliminary takeover talks with Allergan in a deal said to attract less political unease than a much talked of tie-up with GlaxoSmithKline (GSK). It was Pfizer who, last year, attempted to acquire AstraZeneca (AZN) but was thwarted by the UK 100 Company’s management as well as British politicians & media. This particular deal would be sure to create the world’s largest drug maker with a market cap of more than $300bn. Potential for a ripple effect to spread out to UK pharma stocks dependent on how markets perceive this.

Corporate earnings from Royal Dutch Shell (RDSb) saw Q3 earnings fall to $1.8bn, Barclays (BARC) Q3 profits fall 10% as the bank took another £560mn hit for FX rigging. Underlying revenue at Smith & Nephew (SMIN) rose 4% with the artificial hip & knee maker on track for improvement in 2015 as people get older, larger and more gout-ridden. In telecoms, BT group (BT) revenue rose 2% in Q3, seen as a record quarter for TV advertising. See WPP (WPP) today for a reaction to that one, especially since shares in Sir Martin Sorrell’s powerhouse dipped earlier in the week after it posted its own Q3 results.

In focus today will be Eurozone Confidence figures seen stable, although UK CBI Sales are forecast to have backtracked considerably. In the afternoon, US Q3 GDP will be particularly eyed after the Fed update with growth seen slowing sharply from Q2. German CPI is expected to continue to flirt with breakeven although US Pending Home Sales probably rebounded.

US crude inventories rose, but by the smallest amount in 5 weeks, causing wide celebrations and a hard rally yesterday which has paused this morning. It’s still an increase though… Gold sunk after the Fed meet as investors went risk-on taking the yellow metal back down below $1160. Note, however, that more hawkish tones could stem losses once short term excitement dies down.

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

• Barclays says Q3 profits -10%, takes hit for FX compensation
• BT revenue +2% in record quarter for TV adds
• Aviva 9-mth value of new business +25% to $1.26bn
• Shell Q3 earnings fall to $1.8bn
• UK government reduces stake in Lloyds to below 10%
• Smith & Nephew on track for profit improvement in 2015
• Playtech says confident of full-year growth
• Kaz Minerals says on track to achieve FY gold output guidance
• Laird says Q3 revenue +7%
• National Express on track for 2015 growth after Q3 profit rises
• Henderson sees Q3 assets dip on market, FX losses
• Millennium & Copthorne Hotels Q3 lower on Asia weakness