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

UK 100 Index called to open +5pts at 7490, holding above yesterday’s 7475 lows to give bulls hope of another challenge on falling highs resistance at 7500. A breakout would open the door for another run at October highs of 7565. Bears need a breakdown to 7470 to resume the late October downtrend. Watch levels: Bullish 7505, Bearish 7470.

Calls for a mildly positive start come after a downbeat Asian session echoed a negative Wall St finish. This stems from investors digesting updates from the Trump/Russia collusion investigation, fears of a phasing in of US tax reform lacking the punch that markets would prefer, the wait for the President’s choice of next Fed Chair and some major European and US data today.

Asian equities flat to down with financials weak in Hong Kong as Chinese state banks lost ground along with HSBC post results and China PMI prints fell. Telecoms also weighed in Japan amid reports of Softbank ditching merger talks with Sprint-TMobile, while Australia’s ASX is held back by raw materials and financials despite oil holding up to help Energy and metals prices off their worst.

UK corporate news includes; BP Q3 Underlying Replacement Cost Profit of $1.87bn beats $1.5bn consensus expect 4Q production Higher than 3Q; recommends Q4 share buyback. Ryanair expects second half yield slightly better than expected, down 5-6% vs consensus 8%, with stronger ancillary revenues helping after €25m in cancellations compensation. WPP guides for a flat full year after lower like-for-like Q3 revenues.

AstraZeneca, with partner Incyte, expects Phase III trial for Imfinzi & Epacadostat for locally-advanced, unresectable NSCLC to begin in H1 2018. Croda reiterates FY 2017 guidance. Weir Group: Sees strong FY growth at constant FX but Minerals profits slightly lower than previously indicated due to project phasing, investment & reconfiguration costs.

Carillion announces £13.8m disposal of interests in Ask Real Estate. Imagination Technologies; Canyon Bridge reached agreement on terms of recommended cash acquisition. Gem Diamonds revises guidance for lower treatment and higher costs but output left unchanged.

US equity markets began the new week on the back foot as the arrest of former Trump campaign manager Manafort and reports of corporate tax cuts being phased in gradually dented consumer sentiment. The Nasdaq outperformed as Tech extended strength after Friday’s results-inspired gains, however both the Dow Jones and S&P 500 fell (-0.4% & -0.3%, respectively) as Merck again weighed on the former, offsetting gains for Apple on strong iPhone X demand, while broker downgrades for GM and Advanced Micro Devices weighed on the latter.

Crude Oil prices remain within touching distance of fresh 2-year highs despite an element of profit taking, with Brent crude continuing to trade above the key $60 a barrel handle. Its US equivalent is testing a $54 handle, around 1% from yesterday’s highs, while Brent is holding around $60.5, just 20 cents from yesterday’s highs.

Gold has maintained yesterday afternoon’s gains inspired by the first indictments from the Mueller special investigation into potential Russian collusion in the US election, having touched a high of $1279 shortly after the announcements. Despite retreating to an overnight low of $1275, a retreating US dollar has proved supportive and inspired a fresh rally to $1278 to inspire a $1275-78 falling channel.

In focus today will be Eurozone GDP, CPI and Unemployment prints (all 10am). Q3 GDP is seen retreating on a quarterly basis to 0.5% from 0.6% in Q2, however accelerating to a fresh 6-year high of 2.4% annually. Both headline and Core CPI are seen unchanged in October at 1.5% and 1.1% YoY respectively, while Unemployment improves to 9.0%, a 9-year low, from 9.1%.

This afternoon, US Employment Cost Index (12:30pm) is expected to rally back above the 5-year average to 0.7%, before US S&P/Corelogic House Prices (1pm) climb 0.4% MoM/6.0% YoY and the Chicago PMI (1:45pm) falls back from September’s 3-month high of 65.2 to 61.

While speakers are limited to Italian Finance Minister Padoan and the ECB’s Visco at 9:15am, the ongoing US Mueller special investigation into Russian collusion in the US election could further spice up proceedings this afternoon following yesterday’s first indictments.

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