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

  UK 100 called to open +5pts at 6495, recovering a little after the negative close in the US on Friday due to disappointing US macro data and corporate results, not helped by continued emerging market (EM) concerns which have seen many flagship bourses make their worst start to the year since 2009 as EM investors head for the exit at their fastest rate since 2011 ($6bn last week, $12bn in Jan).

 EM concerns exacerbated by Fed comments from Fisher and Williams who shrugged off offshore woes (the decision to taper any further relates to the US alone), which ignores earlier calls from the likes of the World Bank and IMF for an orderly exit, paying at least some attention to the knock–on effects.

 Overnight sentiment in Asia held back by China’s official Manufacturing and Non-Manufacturing PMIs confirming deterioration (Manufacturing at 6-month low, closer to breakeven) adding to worries about slowing growth, helping send the Nikkei near to 2.5yr lows, although China/HK closed for New Year. China’s Non-manufacturing services and construction sub-indices both fell as did new orders, while within manufacturing both new export orders and employment fell.

 Australia only just in the red despite the China data and weakness in its own data (manufacturing, house prices, building approvals, commodity prices).

 Late on Friday, note ratings agency Moody’s added to the EM mix by downgrading Ukraine by one notch and with a negative outlook based on the risks of a liquidity crisis. Note Der Speigel reporting the German Finance ministry signalling preparations for a 3^rd Greek bailout (€10-20bn)

 In focus today we have European PMI Manufacturing updates where consensus hopes to see an improvement in Spain, Italy flat, France confirmed still contracting, but Germany and the Eurozone confirmed nicely in growth along with the UK.

 In contrast the US PMI Manufacturing is seen giving up a little ground versus the preliminary figure, albeit still health growth, while ISM Manufacturing is seen a little lower in January and construction spending slowing.

 Don’t forget this week we also have January US Non-Farm Payrolls on Friday which, after December’s readings (jobs adds miss, but unemployment down) and more cold weather since the New Year, will be very interesting. Nonetheless, the latest Fed update shown the central bank‘s decisions may well be ‘data dependent’ but certainly not single data-point dependent.

 The UK 100 ’s breach of the trendline of long-term rising support at 6500 took it as low as December lows of 6395, resulting in a full retrace of the Dec/Jan rally. The bounce since has got us back close to the breached trendline, but not quite above and opening calls this may remain a struggle given the global concerns which are weighing on sentiment.

 Gold still hovering below $1250 having fallen back from the long-term trendline of falling resistance despite safe-havens being back in vogue amid the waning of risk appetite. Support $1237 and $1231, with resistance $1263. 50-day moving average holding as support for now, but 100-day MA looks a bridge too far for a breakout.

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