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

UK 100 Index called to open +10pts at 7515, testing yesterday’s highs thanks to a reversal of overnight weakness (traded as low as 7480). This keeps it pointing north, in recovery from Friday’s fresh 4-month lows. Bulls need a break above yesterday’s 7518 highs. Bears require a breach of 3-day intersecting support at 7480. Watch levels: Bullish 7520, Bearish 7480

Calls for a positive open come in spite of mixed trading in Asia, direction lacking from a holidaying US, investors reverting to the familiar worrying over global trade. Emerging markets are adding fuel to the fire, with Latin American, Turkish and South-East Asian FX selling off on the back of heavy public debt and a stronger USD (itself a product of more hawkish US monetary policy).

The UK Index , whilst supported by GBP weakness, is additionally pressured by the latest BRC sales data, showing retail sales growth slowing in August, as the heatwave and one-off events passed (World Cup, Royal Wedding), to +1.3% YoY vs. +1.6% in July. Note In-store non-food sales -2.2%, while online grew 7.5%, potentially hurting traditional bricks & mortar UK Index Retail, but good news for newer more on-line biased names.

The USD is stronger this morning due to its status as a safe-haven currency, with corresponding GBP weakness helping UK Index maintain its break-even posture. Preference for USD is sending gold below the $1200 mark, with copper also struggling.

In corporate news this morning WPP Q2 returned to net sales growth for first time since Q1 2017, +0.7%, beating consensus; now expects FY like-for-like net sales, revenue growth similar to 1H. DS Smith trading in line with expectations, input costs recovery helping margins and sales volume grow in all regions; Europac acquisition approval process progressing, completion expected Q4. Will update on plastics review in due course.

Redrow FY revenue +16% YoY (completions +9%, prices +7%), pre-tax profit +21%, order book (excl. JV) +10%, final dividend +65%. Outlook and market sentiment dependent on clarity over Brexit and future of Help to Buy scheme. Cairn Homes swings to H1 profit, revenues double; ups targets

Ryanair Aug traffic +5% (+9% incl. Lauda acquisition), 97% load factor; staff shortages and pilot strike led to 550 cancellations vs 27 last Aug. Wizz Air August capacity +20.1% YoY, passengers +20.4%, load factor +0.2pts, network expanded with 20 new routes. Revenue per passenger +21.4% vs. available seats per km +21.2%.

Alfa Financial Software H1 revenues -27%, operating profit -39%; Trading in-line with revised expectations, revenues decline on smaller number of software implementation projects. Chemring notes impact of Salisbury incident likely to be in middle of £10-20m range, full impact on FY plan still being assessed. Customer demand for the period remained positive.

Halfords H1 like-for-like sales +2.8% (retail +2.6%, autocentre +3.9%, online +11.3%), maintains guidance. McColl's Q3 like-for-like sales -0.9% (reported +0.6%) on supply chain disruption after to Palmer & Harvey collapse.

In focus today is UK Construction sector PMI (9:30am), forecast slightly lower in August after a strong July, although still above the 2018 average, which may impact Construction, Outsourcing and Housebuilder names. Eurozone Producer Prices (10am) are expected to accelerate to their fastest pace of annual growth since May 2017, with inflationary read-across for EUR, although there may be some slowdown month-on-month.

Across the Atlantic, final US Manufacturing PMI (2:45pm) should confirm the lowest sector reading of 2018 on the back of slower growth in orders, output and hiring. ISM Manufacturing (3pm) is, likewise, projected lower.

In terms of speakers, the main event is sure to be Bank of England (BoE) Governor Carney’s (12am, centrist) testimony about July’s interest rate hike decision alongside colleagues Saunders (hawkish), Tenreyro (centrist) and Haldane (hawkish).

Policy may prove the sideshow, however, with speculation rife and clarity desired about the Governor’s plans, whether he will stay beyond June 2019 (already extended by 12 months) after 5 years at the helm. Some suggest he would only do so in the case of a hard Brexit, relishing the challenge of stewarding the UK’s monetary policy into a new era outside the EU.

RBA’s chief Lowe (10:30am) updates us after the Reserve Bank of Australia’s left interest rates unchanged. The ECB’s Nowotny (4pm, hawkish) speaks at an exhibition opening in Vienna, while the Fed’s Evans (3:30pm, dovish, non-voter) makes another public appearance after last night’s Argentina speech was cancelled.

US markets are back in business after Monday’s Labour day holiday, with Ford Motor reporting August sales. Watch the German automakers and DAX for potential read-across in terms of global vehicle demand gauge, especially with the threat of tariffs still hanging over the sector.

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