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

UK 100 called to open +40pts at 6620, supported by a solid trend of rising lows post-Brexit and another round number (6600) cleared overnight extends the Brexit bounce to 15.6%. A continued push higher from last week’s 6400 breakout boosts the probability of that 900pt bullish inverse head & shoulders reversal bettering 2016 highs of 7100. The Bears need to see the trend of rising lows at 6600 breached to put the uptrend in jeopardy. Watch levels: Bullish 6635, Bearish 6580.

A positive opening call comes as Asian equities start the new week by building upon last week’s gains (oil >$50), extending a post-Brexit rebound recovery on hopes that Central Banks will keep the monetary policy punch bowl topped up to offset economic uncertainty unleashed by a UK vote to leave the EU. Note most US markets closed for 4th July Independence day Holiday. 

Japan’s Nikkei is up 0.5% helped by the Yen holding back from recent highs (trading flat while the USD Basket does the same) on hopes that the BoJ is set to step in to offset troublesome currency hindrance for its exporters. Australia’s ASX also higher despite getting its own dose of political uncertainty (80% of votes counted suggest a surprise general election deadlock) and Building Approvals data delivering a worrying plunge although inflation prints suggest a welcome improvement ahead of the next RBA meeting.

US bourses had their fourth straight session of gains on Friday. Note, however, volumes the lowest since 23 June (the day before the UK’s Brexit vote) while longer term Brexit-related risks are seen to remain. Perhaps recent equity market gains should be seen more as a short term rise within longer term volatility. Note also, with the US Jobs Report this Friday, we’re even more likely to see lower trade volumes.

Crude oil prices are up despite a rise in the number of operational US drilling rigs (4 of the last 5 weeks have seen an increase in drilling activity). However the bearish rig count is easily outnumbered  by many a bullish driver including Nigerian production at 30-year lows, falling US stockpiles and some bullish chit chat from the Saudi oil minister Khalid al-Falih (the usual ‘..supply and demand are beginning to come into balance...’ type stuff from him). Brent back up above $50 as a result while WTI is around $49. Note both markers have resistance at 9 June falling highs.

Precious metals are up again with Silver making a fresh 2-year high while Gold has flirted with its Brexit day spike high $1358. The July uptrend could see another test of that level today with a decisive break above putting the March 2014 high $1392 on the cards over the medium term.

In focus today - a likely quiet trading day on account of our stateside cousins being absent for 4th July Independence Day celebrations - will be UK PMI Construction, seen falling back ever closer to breakeven (50.6 from 51.2) in June, maintaining a 10-month decline from its Sept 2015 peak (60) and an overall 2.5yr downtrend (64.8).

The July reading for Eurozone Sentix Investor Confidence is forecast to have eased (8.1 from 9.9) , which makes sense given the uncertainty inflicted on markets by Brexit. And something to make ECB President Mario Draghi smile would be the sight of Eurozone Producer Price Inflation rebounding by 0.3% after a deflationary flirt in May, helping get the annualised figure out of its recent -4.4% trough.

Other than that, it’s almost certainly going to remain about the continued fallout from Brexit as we move into the second full week, further digesting and re-pricing for the new financial, economic and political landscape, the latter being the most entertaining if you are watching the chaos and antics over in Westminster. Any more hints from central banks about stimulus could also help keep the ball in the air, helping markets shrug off the Brexit impact and push on with their recoveries. Is George Osborne set to cut corporation tax to ensure economic stability post-Brexit by keeping the UK competitive.

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

• NoemaLife signs contract with UniLabs
• Construction firm Kier Group says EU referendum result has had no impact on business to date
• Capita says Pensions Regulator extends partnership
• Trakm8 wins Allianz contracts to supply telematics devices
• Gemfields says finalises four debt financing facilities worth $65 mln
• Hargreaves Services says trading ahead of year end meets expectations
• WYG – led consortium wins €13.1m euros western balkans contract
• HSBC completes sale of Brazil business
• Britain set to receive new Qatari LNG tanker on July 14 – shipping data
• Cobham signs A$1.2bn contract extension with QantasLink
• Capita names Ian Powell as new chairman from next year
• Oil stable as market seen in balance, but slow Asian demand hurts