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

UK 100 Index called to open +25pts at 7345, having extended Monday’s rebound to test the 7350 highs of the week overnight. Unfortunately the rally was checked by falling highs since 21 March, putting the index at the apex of a narrowing pattern. Bulls are looking for a breakout to 7360 to clear falling highs resistance. Bears are watchful of any test of rising support and 7325 overnight lows. Watch levels: Bullish 7355, Bearish 7330.

Calls for a positive open come after Wall St gains were bettered by Asian bourses overnight. This in spite of more sabre rattling from North Korea which likely launched another missile in response to US threats and as a well-timed message before tomorrow’s crucial US-China Presidential meeting.

Further gains for Oil (bullish flag on US and Brent, back to $54 and $56.50?) have served to buoy and further boost sentiment after a bigger than expected API drawdown added to revived hopes of an OPEC-led production cut extension helping offset, to some extent, a situation of rising US production.

In terms of geopolitics, North Korea adds to a worsening situation in Syria, fallout from last night’s French presidential election debate (Mélenchon win?) as well as a tenuous Brexit-Gibraltar-Spain story. Event risk also exists with Fed minutes tonight and Friday’s US jobs report. 

Australia’s ASX outperforms thanks to higher oil prices and some welcome gains for metals prices boosting both the Energy and Mining sectors. Japan’s Nikkei shows gains, but is hindered by recent Yen strength offsetting Energy gains, while China and Hong Kong offer a mixed bag following holidays.

UK Index company news this morning: ConvaTec announces US launch of Foam Lite Dressing. BHP Billiton says force majeure declared for coal shipments from Queensland mines due to rail damage from last week’s tropical cyclone. McCarthy & Stone says it is on track to meet FY expectations. Bovis has appointed a new CEO, and says sales and reservations are in-line, and Galliford Try withdraws its merger offer.

US equity markets swung back into positive territory yesterday as Energy names benefitted from a crude oil price rebound, while investors keenly watched a ‘town hall’ address from President Donald Trump. The Dow Jones was the rank outperformer, rising by 0.2% as Manufacturing and Energy names spearheaded the charge following Trump’s assertion that infrastructure spending could top $1 trillion, while the S&P500 and Nasdaq indices finished closer to flat, with the Energy sector leading the former.

Crude Oil prices have rebounded handsomely as investors continue to weigh up the potential impact of an extension of the OPEC-led production cuts, while API inventory data showed a larger than expected draw down ahead of this afternoon’s corresponding US government data. Both Brent and US benchmarks are trading at their highest levels since 8 March, having bounced from intersecting support at $52.80 and $50 per barrel respectively, in what could be bullish flag patterns.

Gold has continued to retrace overnight from yesterday afternoon’s highs, even as the US dollar falls back from highs, as investors dial back bets on the safe haven asset following a perceived loss for right wing candidate Le Pen in the second French Presidential debate. The precious metal has fallen back further from resistance at $1260 to testing 3-day rising lows support at $1255, with a breakdown potentially opening the door for a retracement to the channel floor at $1241.

In focus today will be the Fed’s March Meeting Minutes (7pm), investors looking out for clues about the likely path of US monetary policy normalization and further rate hikes this year, while the Fed itself may remain in focus from an ethical standpoint after Lacker's surprise resignation last night.

We also have the European Parliament voting on Brexit terms today which could hint at its negotiation style over the  next two years.

On the data front, we have multiple PMI Services releases. In the UK, expect a small improvement in March. On the continent, France, Germany and the Eurozone should all confirm gains based on preliminary readings, although periphery nations Italy and Spain likely only edged up marginally.

Early afternoon, the US ADP Employment Change can serve as a warm up for Friday’s US Jobs report; net gains of 187K are expected, down from 300K last month’s, but holding around the median.

Thereafter, US PMI Services probably gave up ground in March, echoed by ISM Services/Non-Manufacturing, although the latter’s components (Employment, Prices. New Orders) could garner more attention, given their importance for the Fed in terms of jobs and inflation .  

As always, US Oil inventories have potential to spice up Crude prices in light of the rising US production versus OPEC output cuts. API already suggested a larger than expected drawdown overnight, could we see official government data mirroring the industry data?

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

• UK builder Galliford Try ends Bovis buyout attempt
• John Wood Group estimates higher cost savings from Amec Foster deal
• HSS Hire Group reports FY adjusted pre – tax profit £5.8m
• BHP declares force majeure on Bowen Basin coal deliveries
• Real Good Food acquires majority interest in Brighter Foods
• UK car sales rise 8% in March – preliminary data
• WS Atkins says reaches pension plan agreement
• Mccarthy & Stone H1 pre – tax profit down at £21.8m
• Bovis appoints new CEO, says Galliford bid failed to reflect value of firm
• Premier Oil says to dispose Pakistan business for $65.6m
• DCC to buy Shell's LPG business in Hong Kong and Macau
• DCC says trading in line, announces CEO succession
• London copper up, zinc nickel rally as China returns
• Oil rises to near 1 – month high on tightening of supplies
• Gold steady ahead of Trump, Xi meet; March Fed minutes awaited