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

UK 100 Index called to open +30pts at 7375, building on yesterday’s rebound from 7300 to extend both a 3-week 7300-7450 channel and a longer 2.5-month 7300-7550 sideways shift. Bulls require a break above 7380 to give hope of regaining Friday’s 7440 highs. Bears need a breach of 7360 overnight lows to see a return to 7300. Watch levels: Bullish 7380, Bearish 7360.

Calls for gains at the open come thanks to a calming of nerves regarding the North Korean threat, resulting in a positive close on Wall St echoed by gains in Asia overnight. This comes largely from a rather calm response from US President Trump - for once not via Twitter - and in spite of Pyongyang keeping up its aggressive rhetoric.

Demand for safe havens has thus reversed with Gold, Silver, the Japanese Yen, Swiss Franc and bonds all giving up ground in favour of risk assets such as equities and commodities (Copper, Iron ore, oil). This despite the USD regaining poise (bullish flag?) thanks to positive stateside data on consumer confidence and housing.

Oil has extended its rebound rebounded thanks to a positive API inventory report - ahead of this afternoon’s EIA equivalent - despite a stronger USD and still influenced by news of the impact to production/refining operations from Hurricane Harvey.

Japan’s Nikkei is higher thanks to the reversal of yesterday’s Yen strength and gains for all sectors but Energy, with oil still off yesterday’s highs. Australia’s ASX is flat as Energy is hindered by oil and financials and telecoms suffer. Hong Kong outperforms thanks to IT.

Crude Oil prices have consolidated yesterday’s gains, with Brent crude holding above $51.80 and its US equivalent above $46.20. Note, however, the continued divergence of both benchmarks after the latter broke below 2-month rising lows support on Monday, while the former holds just above its support level (~$51.5) but below horizontal resistance at $53.

Gold has come under renewed pressure having recovered to $1313 overnight as the US dollar extends its rally from yesterday morning’s 32-month lows. The precious metal is testing early morning lows and 12-month intersecting support of $1308, with a bounce potentially taking the precious metal back to $1313.5 overnight highs, while a breakdown could see a return to yesterday’s $1305 lows, or further (bearish flag?).

In focus today will be Eurozone Confidence Indicators (10am) ahead of next week’s ECB meeting. While headline Consumer Confidence is expected to be confirmed unchanged within touching distance of June’s 10-year highs, Economic, Business and Industrial measures are all seen improving marginally. The only exception is the Services segment, seen retreating minimally.

Elsewhere this morning, UK Net Consumer Credit (9:30am) is seen unchanged, while markets look for Mortgage Approvals to have bottomed out, with expectations for the July print to come in at a 4-month high after June’s 9-month low.

This afternoon, the preliminary reading of August German Inflation (1pm) is seen retreating from July’s 5-month highs, while yearly growth extends its 3-month uptrend. US ADP Employment Change (1:15pm), widely seen as a warm up for Friday’s Non-Farm Payrolls release, is expected to show that the private sectors added 180K jobs in August, its first increase on the previous month since May.

The second estimate of US GDP (1:30pm) is expected to see an uptick from its preliminary reading (2.7% exp. vs 2.6% prev.) while Personal Consumption figures will provide the latest insight into the health of the US economy following yesterday’s better than expected consumer confidence figures.

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

• Micro Focus Int'l updates on share capital consolidation, return of value
• Pantheon Resources suspends several Texas projects after hurricane Harvey
• HSS Hire posts HY adjusted loss before tax of 14.2 mln pounds
• Petrofac reports 10.7 pct fall in first – half core earnings
• Petrofac posts HY net profit of $158 million
• Ofgem Challenges National Grid Cost Plan For Hinkley Point Upgrade
• Oil major Total sees growth in North Sea output with Edradour & Glenlivet start – up
• British homewares retailer Dunelm's chief steps down
• Office space provider Workspace sells industrial estate property for 30 mln stg
• WH Smith sees FY outcome in line with expectations
• BHP Billiton restarts some midstream, wells in Eagle Ford
• London copper holds below three – year top as dollar rebounds
• Gold rises as risks of geopolitical escalations persist
• Crude dips, gasoline spikes as floods knock out almost a quarter of U.S. refineries