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

UK 100 called to open flat after a mixed end-of week session in Asia (Japan closed) with the positive US lead (lower jobless claims, narrower trade deficit) again ignored – sentiment dented by another weak number from China, this time Non-Manufacturing (Services).

Traders likely playing wait and see following the ECB’s rate cut and dovish update yesterday and ahead of some big macro updates.

Overnight data saw more bad news from Australia with Services Index falling well into contraction, increasing expectations of a rate cut next week (watch AUD), despite the country’s Financial Review suggesting momentum building. Knock-on from China slowdown being felt?

Much discussion late yesterday and overnight about ECB rate cut after Nowotny said action was reaction to very weak economy and low rates here to stay. We remain sceptical any cut provides more than a market boost rather than economic , with banks unable to do more to help promote growth, although options being discussed to penalise those not helping.

The mention of negative deposit rates is an interesting addition to the ECB press conference, which dented EUR more than the rate cut itself. Such policy enacted by some banks, but not yet by any central banks. Another unconventional measure necessary to help out with problems amid the EUR experiment.

 In focus today will be the UK Services PMI which is seen improving in April and remaining in growth while US Employment will be as watched as ever after the weak ADP number. Consensus still looking for growth to have picked up, but unlikely enough to put the Fed at ease, keeping the QE-addicts happy.

UK 100 still trading sideways (that’s 2 weeks now). Likely the status quo until this afternoon when US updates on employment.

 In FX, GBP/USD still in uptrend from mid-March, trading below recent highs of 1.56, but with support possible at 1.55. US employment data could dictate direction with poor number meaning QE for longer, denting USD, and so benefiting the pair. EUR/USD off its post-ECB rate cut lows. Resistance likely at recent highs around 1.32 and support likely 1.30. Pair could benefit from poor US employment.

 Gold back near recent highs of $1480, having benefited from poor ADP employment number and likely pricing in a poor Non-Farm Payrolls do see QE increased or at least maintained for longer.

Oils rebounded in spite of renewed worries about Chinese growth, with bargain hunters stepping in. US Light Crude back up near recent highs of $94.5. Brent Crude not recovered quite as much, but still up well above $100.

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

• Aussie              Services Performance             Deteriorated
• China               Non-Manufacturing PMI         Deteriorated
• Aussie              Producer Prices                       Improved
• India                Interest Rates                          Cut, in-line
• See Live Macro calendar for all details

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

• Capital and Counties says Covent Garden estate 99 percent let
• Fastnet Oil and Gas wins more Celtic Sea acreage
• Laird first-quarter revenue falls to 119 mln stg
• Kentz sees double digit earnings growth this year
• Direct Line Q1 pretax profit rises
• RBS returns to profit, to finish restructuring in 2014
• Man Group posts highest quarterly outflows since credit crisis