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

UK 100 Index called to open -20pts at 7350, having sold off into the close yesterday after a break back below 7400 September support. Note potential for overnight sideways consolidation to represent a bearish flag that ultimately sends the index back to 7300 Jul/Aug lows, or worse. Bulls need to see a breakout to 7360 for any hope of a bullish turnaround. Bears require a breach of 7335 overnight lows to kick off that bearish flag. Watch levels: Bullish 7360, Bearish 7335

Calls for a negative start come after an extension of yesterday afternoon’s sell-off. This was inspired by fresh concerns about conflict following aggressive North Korean statements and Trump adding fuel to the fire with talk of increased military equipment sales to Japan and South Korea. Asian bourses offside overnight but not as weak as last night’s close on Wall St.

Revived geopolitical jitters dented hitherto investor resilience, resulting in a fresh rush towards safe-havens like Gold, the Japanese Yen, Swiss Franc and of course Bonds. This has been further fuelled by USD weakness in the wake of poor macro data and dovish comments from both the Fed’s Brainard and Kashkari.

Corporate news this morning includes Barratt Developments hiking its dividend by 39% and easyJet traffic stats echoing peer Ryanair with August load factor gains and passengers +9%. Berkeley Group also says trading is in-line and sees 2018 profits at least as strong as 2017.

After cutting production guidance on Monday, Acacia Mining has bought Gold put options with a $1,300 strike price to provide a floor for the majority of its next 6 months of output, above the $1200 it has budgeted for. Amec Foster Wheeler and Petrofac have also both announced contract wins.

US equity markets closed sharply lower in a delayed reaction to North Korea’s weekend nuclear test. Reopening after the Labor Day extended weekend, the Dow Jones closed over 1% lower - its biggest drop since mid-August - as Financial and Manufacturing names weighed, while the Tech-focused Nasdaq closed just shy of 1% weaker and the S&P 500 snapped a 6-day win streak, closing 0.7% offside, as Insurers weighed after tropical storm Harvey.

Crude Oil prices have maintained yesterday’s gains on hopes that Saudi Arabia and Russia will extend production cuts, although have dipped from their highs as North America prepares for yet another major hurricane. With that said, Brent crude, having traded a 3-month high yesterday afternoon, is holding above $53 a barrel and is rallying from overnight lows of $53.2, while its US counterpart is is rallying from $48.50 overnight lows.

Gold has also held overnight gains based on own safe-haven inspired demand as North Korea and the US show no signs of stepping back from the brink of war and dovish US central bank speakers. After trading a fresh 12-month high of $1334.5 yesterday evening, the precious metal has fallen back to Monday’s resistance-turned-support at $1337, however remains significantly above yesterday’s lows of $1326.

In focus today will be this afternoon’s US PMI Services (2.45pm), expected to confirm more than 2pts of improvement in August (56.9 flash vs 54.6 prev), at odds with yesterday’s stable European prints. US ISM Non-Manufacturing may offer a similar message although, as usual, the individual component performance (employment, new orders, prices) may dictate the market reaction.

Following a spate of Dovish Fed speakers overnight (Kashkari; Kaplan), the Fed’s Beige Book (7pm) will likely highlight policymakers’ concerns that inflation remains a distance below the bank’s 2% target target, while the prominent speaker of note today will be German Chancellor Merkel (4pm) ahead of the German election in just under three weeks’ time.

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

• Vodafone Group raises 14.85bn rand from Vodacom stake sale
• Gold miner Acacia buys put options at $1,300 per ounce
• Amec Foster secures $604m engineering, procurement and construction contract
• EasyJet says August load factor at 96.3%
• UK's biggest builder Barratt buoyant as profit rises
• IT security group Sophos raises full-year billings forecast
• Petrofac wins Sakhalin contract worth more than $700m
• Charles Taylor says FY performance will be in line with expectations
• Berkeley says London housing market still hit by Brexit, tax hike
• Sports Direct reiterates earnings guidance ahead of shareholder meeting
• Interserve wins five-year contract worth £90m
• Micro Focus Q3 revenue falls 3%
• Mccarthy & Stone says full-year revenue up 4%
• London copper eases from 3 – yr peak as investors book profits
• Oil markets dip storm Harvey fallout; Hurricane Irma heads into Caribbean
• Gold steady as N. Korea tensions, Fed rate outlook support