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

UK 100 Index called to open -10pts at 7340, holding a 7330-7350 sideways channel, but only after an overnight flirt with 7300 to test December rising support. Bulls need a 7360 breakout to allow a recovery towards yesterday’s 7380 breakdown (or better). Bears are watching for a 7330 breakdown and any troubling of 7305 overnight lows. Watch levels: Bullish 7360, Bearish 7330.

A negative opening call comes after a weak Wall St finish (Tech underperforming) extended to Asia overnight as a bond market sell-off inspired by hawkish (perhaps misconstrued) central bank comment proves contagious for equities. After years of low rates and QE pushing the two sector asset classes to record highs, the relationship appears to hold even in the case of a reversal. Sentiment is however off its lows thanks to China PMI data and major equity levels having held up.

Japan’s Nikkei is in the red due to Yen strength, tech sector loses echoing those in the US and some disappointing macro data. Australia’s ASX underperforms on account of financials and materials. This despite a bounce for oil and base metals proving resilient (helped by USD weakness, positive China PMIs), especially Copper, although Iron Ore off its best. Chinese equities outperform, just shy of breakeven.

In stark contrast to Wednesday, US equity markets fell sharply overnight as large-cap Tech stocks resumed their sharp sell-offs, while Manufacturing names also weighed on the Dow Jones as it closed over 150 points lower. Unsurprisingly, the Nasdaq composite underperformed on account of its heavy Tech weighting, while the S&P500 suffered its worst session for a month as it briefly fell below its 50-day moving average for the first time since mid-May.

Crude Oil prices have rallied from yesterday evening’s lows at rising lows support, keeping alive 1-week rising channels. Both Brent and US benchmarks are yet to recover to yesterday’s 2-week highs, however remain within touching distance. Bulls are eying resistance at $48.25 (Brent) and $45.50 (US). Bears will be watching US production proxy Baker Hughes Rig Count this evening for yet another weekly increase, which could reignite rising production concerns and potentially take both benchmarks below aforementioned rising lows support.

Gold remains subdued after this week’s hawkish turn by European central bankers and has been impacted further by June falling highs resistance. However, the precious metal continues to trade around support at $1243, having recovered from a test of the mark yesterday afternoon. Further hawkish rhetoric from the ECB or BoE, subsequently weakening the USD, could add to the safe-haven’s woes, although a dialling back of hawkishness may help it to recover for a test of $1250 falling highs resistance.

In focus today, after yesterday’s upside surprise from across the Atlantic, will be the Q1 final reading for UK GDP (9:30am). Consensus is looking for confirmation of 0.2% growth in the quarter and 2.0% annually, versus 0.7% and 1.9% previously. Reads for Business investment and the key Services component (75%) will be eyed in terms of Brexit uncertainty and its impact on UK Plc.

Elsewhere, flash June Eurozone CPI (10am) is expected to show headline price inflation cooling further, to 1.2% from April’s 1.9% peak. Core probably edged back up to 1.0% from 0.9%, to hold around the mean, but both still well below the ECB’s ‘below or close to 2%’ target. German unemployment is expected unchanged and French CPI stable in June.

This afternoon, US Personal Income and Spending measures (1:30pm) are seen slowing in May following recoveries in April, the former ending a 3-month recovery while the latter remains under pressure, and the inflationary PCE Index are also seen showing a slight slowdown, adding to a murky inflation picture for Yellen and Co. at the Fed which is expected to hike further this year.

The Chicago PMI (2:45pm) is expected to edge lower from its highest reading since 2014 in May, while the University of Michigan Sentiment (3pm) is expected confirmed at a 2017 low of 94.5. Oil watchers may want to keep an eye on the US Baker Hughes Rig Count for what could be the 24th weekly increase in active US rigs maintaining the global supply glut situation.

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

• UK's Serco cautions markets more unpredictable
• Serco sees first – half revenue of £1.5bn, says order intake strong
• Trinity Mirror sees HY, FY results in line with its expectations
• Head of Old Mutual's U.S. fund arm steps down
• Old Mutual solvency capital ratio falls in 2016
• Game Digital says Spanish business continues to trade strongly
• Interserve says Tim Haywood to step down as group finance director
• BHP updates on legal settlelement over the Samarco mine disaster in Brazil
• Court gives BHP, Vale until Oct 30 to settle $47bn Samarco claim
• London copper hovers below key level of $6,000, eyes 7% gain in H1
• Gold steady as dollar falls, but hawkish central banks weigh
• Crude oil prices firm, set for biggest weekly gain since mid – May