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

UK 100 Index called to open -30pts at 7295, albeit off its 7278 overnight lows and still hindered by accelerated falling highs resistance at 7300. Bulls need a decisive break back above 7300 to fuel recovery hopes. Bears want a breach of 7278 to open the door for completion of a 1-month bearish flag at 7200. Watch levels: Bullish 7310, Bearish 7275.

Calls for a negative start come after a negative close on Wall St (S&P’s first 3-day losing streak since Aug) was followed by an even weaker session in Asia (8 day fall; longest since 2015), the tech sector still in flux regarding US tax reform after such a long rally. Commodities, however, may be the architects of UK blue-chip sentiment after moves in Copper and Oil.

Note Copper off its latest China-inspired sell-off lows (rising stockpiles, uncertain demand), but not without dragging Miners lower in Australia overnight. Whist the red metal may have finished one bearish flag (from 27 Nov) the risk is that it is in the process of forming another.

Oil prices are also weak following last night's US API inventory data (and ahead of this afternoon’s EIA), which showed a much bigger than expected build in Gasoline stocks, which dented sentiment overnight and is likely to have a bearing on the UK Index via its 14.5% direct exposure to Energy, although Crude prices perhaps didn’t react quite as strongly as one might expect.

In UK Index corporate news, Hammerson agrees to £3.4bn offer for Intu Properties (27.5% premium). Saga sees underlying profit growth down on prior year. Shaftesbury raising £265m via placing of 10% in new shares at 952p. GlaxoSmithKline P3 study shows efficacy of Shingrix shingles treatment. EasyJet November passengers +8.1% YoY to 5.4m, load factor +2.6pts to 92.3%. Smith & Nephew acquires Rotation Medical for $125m

US equity markets fell (S&P first 3-day losing  streak since August) despite a rebound of sorts for  Tech, however, Housebuilders reacted to a negative update from Toll Brothers. Upgraded buyback programmes from Mastercard and Bank of America, were welcomed, but not enough to reverse market sentiment as we await confirmation on tax reform.

Crude Oil prices are back from yesterday’s highs but held up overnight, Brent Crude at $63.1 and its West Texas cousin at $57.3. With the OPEC/non-OPEC agreement out of the way, the focus is back on weekly US inventory updates and moves in the USD (off its lows, bullish triple bottom reversal overnight). Gold has bounced from October lows of $1260 thanks to the weaker USD and geopolitical risk (US, Middle East, Brexit).

In focus today will be Theresa May at Prime Minister’s Questions - PMQs (12pm) in light of Monday’s failed Brexit negotiations (and her absence last week) and the likelihood she needs to rush back to Brussels to salvage a deal with the EU before Friday’s, “deadline of deadlines” ahead of a key 14-15 December summit. Expect strong questioning from both sides of the house. Watch GBP.

Data-wise, whilst no consensus is provided for Eurozone Retail PMI (9:10am) the prints may offer a gauge of European consumer sentiment. US ADP Employment Change (1:15pm) likely cooled from October’s post-storm rebound, and is considered a pre-cursor for Friday’s US Non-Farm Payrolls. US Non-Farm Productivity and Unit Labour Costs (1:30pm) may show a marked acceleration and slight cooling, respectively to keep data watchers on their toes. Watch USD.

Finally, weekly US Crude Oil Inventories (3:30pm) will provide the regular flash in the pan for commodities traders. Expectations for a headline Crude drawdown could aid bullish sentiment after selling in reaction to last week’s OPEC/non-OPEC production cut extension, however an expected Gasoline build may offset some positivity, especially after last night’s API data delivered just that.

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