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

UK 100 Index called to open +5pts at 6455, after the US closed with small losses amid much volatility following the US Fed’s monetary policy update which saw an end to QE3, as expected, but included a marked hawkish change in language regarding the labour market (upbeat), suggesting an eye on an eventual first interest rate rise.

The central bank kept its forecast of low interest rates for a “considerable time”, but tied the start of that period to this month, with a get out clause allowing earlier rate rises if economy improves faster, with the fallout being the USD strengthening to a 4-week high and equities closing in the red.

Asian stocks mixed overnight after the Fed deemed the US economy strong enough to end QE but pledged to keep rates low for the foreseeable future, with Japan’s Nikkei up on the stronger USD weakening the JPY, helping exporters, while Australia higher on trade data showing import and export price declines slowing.

After the US close, packaged food maker Kraft reported Q3 profits 11% lower as it raised prices to offset higher commodity costs. Revenues slightly missed expectations which saw shares edge lower in after-hours trading. Insurer MetLife, however, more than doubled profits in Q3 amid strong investment income and thankful absence of harsh hurricanes. Visa topped estimates sending shares 6% higher.

The UK flagship index UK 100 continues to try higher, and now above 6400 we still expect this to prove supportive for any pull-back and still pencil in the chance of a bullish Inverse Head & Shoulders reversal being delivered (neckline 6400; target 6730). Watch levels: bullish 6475, bearish 6400.

In focus we have German Unemployment seen stable in October along with Eurozone Confidence surveys, but German Consumer Prices Inflation seen weakening, which will remain a worry in a region still plagued with economic, financial and confidence headwinds.

After the Fed update and change of language, the big event being the first look at US GDP for Q3 with expectations for it to have slowed from Q2’s strength (itself offsetting Q1 contraction) amid global growth slowdown fears.

In commodities, Gold has given up ground to trade back around the round $1200 mark on a stronger USD and more optimistic outlook from the Fed diminishing the need for safehaven.

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