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

UK 100 called to open -50pts at 6540, taking the correction a stage further (as we proffered last week, 6550 being -5% from recent 13yr highs) with a negative risk-off lead from Friday’s US close on renewed Fed taper fears after some strong US data (Chicago Fed, Uni of Michigan) to close the week and month, despite it increasing hopes of economic recovery and plenty of other data at odds (subdued consumer spend, benign inflation).

Japan’s Nikkei still under significant pressure, with yet more big losses overnight (-3.3%) after comments from PM Abe about monitoring the markets closely, suggesting concerns, but expects BoJ communication to calm things (more QE?).

Australia in the red after mixed Chinese data with Saturday’s official PMI Manufacturing better and improved but this morning’s Non-Manufacturing PMI a touch lower while HSBC’s Manufacturing PMI dropped into contraction and reviving fears of tepid/patchy recovery in the world’s #2 economy. Mixed Aussie data ahead of RBA rate decision.

Lots of weekend comments from central bankers with the ECB President Draghi talking of challenging situation but signs of possible stabilisation and gradual recovery in late 2013 while the Fed vice chairman Yellen said the largest banks should hold more capital and shadow banking sector a major risk source.

In focus today we have final readings Eurozone PMI Manufacturing which are all seen sub-50, although the UK’s and US numbers are expected to have improved (the UK’s back into growth). US ISM Manufacturing will be keenly watched after the Chicago Fed beat on Friday which added to QE3 taper fears. Remember we have US Non-Farm Payrolls on Friday to spice things up further.

UK 100 corrected all the way back to 6550 as discussed last week with fall back below 3-month intersecting trendline, returning it to resistance. Next major level 6500 despite round numbers having offered limited help of late. As asked last week, is correction over or still in progress? Does new month count for anything? Is “Sell in May and go away” very much valid and will summer prove as volatile as recently offering opportunities and risk in equal measure?

In FX, GBP/USD still up above 1.52 as USD shunned in favour of GBP. Is there a second up-leg to be had? QE3 taper swing fears continue to sway the major cable rate. EUR/USD still volatile, with break below and then recovery above 1.30. USD/JPY still weak and getting closer to 100 with Japanese bonds still being ditched (like in the US), increasing yields and risk.

 Gold back below $1400, with ascending triangle pattern failing. Uptrend still intact with rising lows below $1390. Weaker USD not helping, with benign inflation and less safehaven demand proving stronger drivers.

US light Crude testing 1-month lows of $91.5 after last week’s OPEC meeting hinted at fears over US shale gas impact and macro data gives mixed picture on global growth and despite USD being weaker. Brent also making new 1-montyh lows, testing $100.

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

• China               PMI Manufacturing               Better
• Aussie              AIG Manufacturing                 Improved
• Japan               Capital Spending                     Better
• China              Non-Manufacturing PMI      Deteriorated
• Aussie              Retail Sales                             Worse
• Aussie              Company Operating Profit     Better
• Aussie              Business Inventories               Worse
• China              HSBC PMI Manufacturing     Worse
• Japan               Vehicle Sales                           Deteriorated

See Live Macro calendar for all details

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

• Melrose Industries says may sell Crosby and Acco units
• Costain wins place on London’s TfL framework
• Oxford Biomedica pauses trials, probes impurities
• Phoenix IT profit dips, says recovery possible
• Premier Gold Resources raises 1.5 mln stg in 2012 to fund exploration
• GW Pharma swings to net profit in first half