UK 100 Index called to open +20pts at 7520, holding Friday's late rally above 7500 to extend last week’s rally from 7400. Bulls need a break above 7537 overnight highs to extend the long term retrace towards Jan 7800 highs.Bears require a breach of 7510 overnight lows to threaten a reversal towards 7400. Watch levels: Bullish 7540, Bearish 7500.

Calls for a positive open derive from a strong start in Asia, albeit without Japan and China, closed for holidays. The Hang Seng is +1.5% with Tech and Banks leading the way, with investors still enthusiastic about last week’s Korean leaders’ meeting and the prospect of “de-nuclearisation” on the Korean Peninsula.

With Japan partially closed for Golden Week (Monday, Thursday and Friday) and China shuttered today and tomorrow, global influences for the UK Index stem from geopolitics (Korean talks, Trump daily tweets, UK/EU Customs Union negotiations) a flurry of M&A (Sainsbury-ASDA, WPP (Kantar)-CVC, T-Mobile-Sprint etc), and of course earnings season pon both sides of the Atlantic.

In corporate news this morning, Sainsbury announces tie-up with Asda, with the latter’s owner WalMart holding 42% of the new entity and receiving £3bn cash. To maintain both brands (no planned closures, to open Argos in Asda); EBITDA synergies of at >£500m, reduce SBRY lease-adjusted leverage, double digit EPS accretion and low double-digit return on invested capital (ROIC) by second full financial year post-completion.

Sainsbury FY sales +9%, like-for-like +1.3%, underlying pre-tax profit +1.4%, final div +7.6%, net debt lower, free cash flow +35%, second half profit +11% but Q4 sales ex-fuel slowed vs Q3, comfortable with FY consensus underlying pre-tax profit £629m

WPP Q1 revenues -4% (6% FX headwind), like-for like sales +0.8%, North America -10.6%, net debt rises, 2018 guidance unchanged, fresh look at strategy with focus on growth; CVC approaches WPP over potential Kantar Media sale. Sports Direct says it now owns 8.9% of US brand Iconix and 19.3% of Finish Line.

Aviva to make goodwill payment to those who sold pref shares March 8-22 after Aviva said it might cancel the high yielding shares but reversed the decision following criticism.  Randgold Resources says Tongon mine operations back at full capacity after Q1 stoppage.

Royal Bank of Scotland plans second ring-fencing transfer program, to move certain customer derivatives from NatWest Bank to NatWest Markets.Interserve reports FY revenues +0.2%, operating profit, -51.7%, net loss +159%, net debt +183%.“The turmoil of the past 16 months is behind us, but the hard work is not.” Old Mutual says businesses continue to trade in line with its expectations; Quilter 1Q Net Client Cash Flow +14%.

Oil prices off its highs again, as oil traders catch their breath following a strong April rally. Geopolitics With latest indecisive moves, the indication is that oil is unlikely to make any sudden large moves in the short-term unless we get another surprise build (or draw) in US oil stockpile as we had the previous week.

Gold was largely unchanged at $1321 (+0.02%) as the price movements deriving from higher US Treasury bond yields (which settled north of the psychologically-important 3% mark) have played themselves out.

In focus today is data limited to this afternoon including German Consumer Price Inflation (CPI; 1pm), forecast unchanged at 1.6% YoY in April, holding the March rebound.

On the other side of the pond, US Personal Income & Spending (1.30pm) are expected show the former unchanged at 0.4% MoM but the latter accelerating from 0.2% to 0.4%. US Pending Home Sales (3pm) may show a monthly slowing but an improvement versus last month’s very weak pace of annual growth. The Dallas Fed (3.30pm) may deliver a bounce from last month’s weakest since November.

Big name US companies reporting Q1 results today include Allergan, McDonalds and Transocean which could have read-across to both UK and European names later in the day.

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