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

UK 100 Index called to open -30pts at 7155, back testing 7150 lows from late last week. Whilst technically a breakdown from last week’s rising channel, it’s not quite enough to suggest the next leg lower of a bearish flag towards 7060. Bulls want a break back above 7160 to allow a rally back towards 7200. Bears need a breach of overnight rising lows at 7150 to allow for another test of last Monday’s 7130 base. Watch levels: Bullish 7165, Bearish 7145.

Calls for a negative open come as Asian equities react to USD weakness in the wake of Trump’s Travel ban, weighing on sentiment via reciprocal strength in the Yen to hinder Japan’s Nikkei. However, we note the Greenback up well off its worst levels and both GBP and EUR backtracking versus the US currency which could help both the UK Index and DAX around the European open.

Note China and Hong Kong closed for the Lunar New Year, leaving only Australia's ASX as the other major regional driver, underperforming amid a mixed performance for the commodity space with Copper and Oil just below breakeven along with precious metals while Lead, Nickel and Zinc advance.

A virtually flat session for US equity markets on Friday (note, this was before Trump’s latest executive order) saw the Dow Jones marginally retreat from Thursday’s all time highs as weaker than expected GDP data and falling oil prices weighed on market sentiment. The Nasdaq outperformed its peers, closing higher by 0.1%, while the S&P 500 finished 0.1% lower as Energy names fell to the back of the pack.

Crude Oil prices have been unable to mount a recovery rally despite a weaker USD during early Asian trading hours as the Baker Hughes Rig Count on Friday once again showed an increase in US production, marking the 12th week in 13 that stateside production has increased. Brent crude remains impaired by 2017 falling highs resistance having been unable to maintain a breakout on Friday, while US crude trades in a tight $52-54 range.

Gold price has rallied in Asian trading after Trump’s travel ban saw demand from investors for safe haven assets increase significantly following the completion of a bearish double top reversal pattern to $1181 on Friday. With that said, however, the yellow metal has been unable to overcome $1196 support-turned-resistance as the USD strengthens with weak trading volumes as the Lunar New Year holiday sees major Asian trading hubs Hong Kong and China closed.

In focus today will be fallout from an inflammatory Trump Travel Ban and its effects it may have on the ‘Trump reflation trade’ that has supported markets for two months. The ban adds to a Mexican wall to curb immigration and sees him continue to deliver on election pledges. This increases chances of more extreme trade-related protectionism, such as import tariffs on China, that could put a real spanner in the works for globalisation. Others worry about retaliation, not just on trade and travel.

Data-wise, Eurozone Confidence readings are seen largely unchanged in January before preliminary German Consumer Inflation for January continues to climb towards the magic 2.0% target that will be music to the ears of ECB President Draghi, perhaps more-so ECB governing Council member, Bundesbank head and accommodative policy hater Weidmann.

This afternoon, US Personal Income and Spending are expected to have recovered back to around their 12-month mean after a weak November. US inflation metrics are forecast to continue edging up to 2%, adding to the rationale for further Fed rate hikes this year. US Pending Home Sales likely rebounded in December while the Dallas Fed Manufacturing Index held firm.

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

• Estate agent Purplebricks Group says has had a good start to the calendar year
• Genel Energy notes payment for June oil exports from Tawke field
• Flybe third – quarter passenger revenue grows, notes slow start to final quarter
• HgCapital announces sale of Zenith to Bridgepoint
• Gold miner Randgold says talking to Tongon mine employees to end sit – in
• British government cuts stake in Lloyds to below 5%
• IGas says launches redemption offer in the amount of nearly $2.3m
• Glencore warehouse company says aware of forged warehouse receipts
• Oil extends declines on rising U.S. output
• Gold inches up on weaker dollar, Trump policy uncertainty