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

UK 100 Index called to open flat at 6665 with a decisive break below 6690 pleasing to bears looking for a retreat towards 6600 by way of a falling channel on the hourly chart. Note the index this morning hugging the ceiling of that channel and the 20-hour moving average, which might encourage bulls looking for a breakout and move back towards the recent highs 6750. Updated watch levels: Bullish 6670, Bearish 6630.

A flat open for European equities comes following a negative session in Asia as markets get a spot of indigestion from a disappointing tasting menu of economic stimulus measures from the Bank of Japan. This adds to the recent mistrust in Central Banks following a spate of ‘disappointments.’ The Aussie ASX is down despite an RBA rate cut while mainland Chinese markets are holding just above the waterline because, well, it’s China.

S&P has upgraded four Greek banks - Alpha Bank, Eurobank, National Bank of Greece and Piraeus  - to CCC+ from ‘selective default’ following the relaxation of capital controls.

US equities went lower yesterday, weighed down by car makers Ford, GM and Chrysler, all 3 falling short of July auto sales forecasts. Crude futures settling in the red - after continued to dash growth sentiment, as did more lacklustre macro data which could well turn things around in the medium term given it all makes the Fed less likely to raise US interest rates.

Coprporate news includes Biogen being the subject of bid chatter in connection with sector peers Merck and Allergan. Note this could have a positive read across to UK pharmaceutical stocks today.

Post-close we heard from Atlanta Fed Governor Dennis Lockhart who taked about underlyiong economic growth looking better than the GDP estimate had indicate - which chimes with what we have relentlessly sought to remind everyone: It’s just an estimate. Brexit still seen as a medium term risk, however. Lockhart would not rule out a rate hike at the next FOMC meeting, but maintained that any decision must be data dependent. That presumably means a close look at the next 2 US GDP estimates.

Crude prices have not been buoyed by estimates of a broad based drawdown in US inventories because the pace of said drawdown is not seen as sufficient to fight the current glut of distillates (most notably gasoline, or petrol as it’s known in the UK). That leaves markets looking for a surprise in today’s EIA data to merely reassure.

Gold is as gold does ahead of a central bank update - more or less flat. Tomorrow’s is particularly poignant as we’ll hear about what the UK’s Bank of England is prepared to do in anticipation of a Brexit recession. Since Gold is highly sensitive to the USD, a stimulus bazooka from Mark Carney could see the USD get stronger, making Gold more expensive and thus less desirable. On the other hand, if traders latch onto a bleak outlook then the yellow metal could well benefit on safe haven grounds.

In Focus today we’ve got a raft of Services PMI data taking in China, Japan, the Eurozone, US and UK with the UK’s of particular interest post-Brexit vote and given the big dip in manufacturing and construction (although construction not as bad as expected).

Eurozone retail sales for June are seen pulling back both on the month and on the year - perhaps putting a downer on inflation expectations.

US ADP Employment Change is seen a tad softer in July which will just add to a pullback in ISM Non-manufacturing to continue the correction in recent US macro data, although its Services PMI looks to have improved a tiny bit.

DOE oil inventories round off the afternoon, although expect markets to continue to pay closer attention to distillates stockpile numbers, rather than those for crude.

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