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

  UK 100 called to open +35pts at 6705, having broken above that summer bugbear level of 6660 yesterday afternoon, helped by positive US macro data (PMI & ISM Manufacturing, Jobless Claims, ISM) which goes somewhat to support expectations of QE3 tapering by the Fed, with European markets having already been on the front foot after a good set of PMI manufacturing and continual accommodative stances from central banks.

 Asian markets taken positive lead from Wall Street (S&P closed >1700) which was reacting to signs of global economic improvement, the stronger USD (expectations of September tapering) weakening the JPY yet further and helping the Nikkei +3%. Japan also benefiting from a continued improvement in monetary base as the BoJ stimulus and Abenomics delivers.

 A trim to Aussie GDP and rise in unemployment expectations by the Australian Treasurer on transition period and impact from slower growth (China?) failed to hold ASX back markedly with the weaker AUD providing a cushion. Nor did softer Producer Prices although they support the Treasurer’s comments. Other Overnight data comprised UK House prices which show solid monthly growth and gains on last year accelerating.

 In focus today, after slightly more dovish tone from Fed, will be US employment report where expectations are for Non-Farm Payroll adds of 185K, possibly even closer to 200K after the solid ADP report on Wednesday, and another tick down in unemployment rate to 7.5%. Bad number good for the taper-off enthusiasts, good data good in terms of supporting economic recovery, but after weaker GDP, still potential for tapering to be pushed out until all the ducks are aligned for the Fed.

 The big UK results of the morning are RBS Group which has beaten on revenues and reported a pre-tax profit of £1.4bn versus a loss of £1.7bn a year earlier, appointed a new CEO from internally (flagged up last couple of days) but more provisions. IAG beat on revenues, but made a pre-tax loss. Other names reporting are WMH, REX, ISAT, EMG and DLG.

 The UK 100 broke above summer highs of 6660 yesterday which allows for the possibility that the level reverts to support for support should there be any subsequent weakness, but more importantly as opens up the possibility of a revisit of the May highs of 6875, and maybe even high (all-time highs of 1999, 6930?) with the July pause serving as consolidation. Central banks staying accommodative, and global macro data improving.

 In FX, GBP/USD fallen back to 1.51 on strong US data and expectations of Fed tapering in September, as well as BoE holding fire on any policy change. EUR/USD also dropped from recent plateau of 1.325-1.33 with Fed more hawkish in terms of potential for tapering while ECB stays accommodative with similar stance on rates low for long. Further to fall on subsequent US data?

 In Commodities, Gold fallen out of recent rising channel on stronger USD on tapering expectations from strong US data and opening up the possibility of the yellow metal starting another leg down within its long-term downtrend since last September. With $1300 support having been ditched, support likely at June lows of $1180.

 In Oil, both US Light Crude and Brent Crude recovered on stronger economic data and despite stronger USD, supply concerns and write-downs on US shale by oil majors suggesting potentially less competition. US Light Crude retesting mid-July highs of $108.5 and Brent broken above recent highs of $109 to test $110.

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Overnight Macro Data: (Source: Reuters/DJ Newswires)

• Japan       Monetary Base                   Improved
• Aussie      Producer Prices                  Slowed up
• UK            Nationwide House Prices    Better

See Live Macro calendar for all details

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

• Inchcape announces 100 mln stg share buyback
• Inmarsat signs distribution deal with Rignet
• Inmarsat second-quarter earnings edge lower
• William Hill PLC operating profit rises 8 pct
• IAG swings to Q2 profit as Iberia improves
• Jubilee Platinum says GRE in default of payment terms
• Man Group posts client outflows as key hedge fund suffers
• RBS takes further 185 mln stg provision for PPI
• RBS swings to profit in first half
• RBS names McEwan as CEO after swinging to H1 profit
• Vesuvius H1 trading profit falls
• Rexam says full year results to show improvement over 2012
• Direct Line’s profit nearly doubles on cost cuts and fewer claims