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

UK 100 called to open -10pts, with bleak Japanese Q3 GDP data marking the first contraction in three quarters and increasing the chances that the Q4 reading will also be negative, meaning a technical recession. In response, expectations have risen that the Bank of Japan (BoJ) pursues monetary easing which has helped prop up flagging risk appetite. Note markets likely quiet today on account of US holiday.

Staying in Asia, the Japanese data offset better than expected Chinese Trade data (coinciding nicely with period of power transition) which showed a much bigger trade surplus than expected (highest in nearly four years), helped by acceleration in exports. While this is good news for those worried about the nation slowing, especially after the better data last week, fears remain in the region following the Japanese print, this compounded by new loans data from China also coming in weak.

Europe remains in disarray with Greece’s ruling coalition securing enough votes to approve the 2013 budget, raising hopes that the next tranche of bailout aid will be received, although the disagreement among the troika of lenders themselves maintains uncertainty as to when. It is considered unlikely that today’s Eurozone finance ministers meeting will shed any light. Greece also plans to sell €5bn short-term debt to avoid a default on maturing debt this week, but national banks look capable of being able to cover only 70%. What about the rest?

While US markets may have closed the week in the black, reversing some of their post-election correction thanks to better than expected consumer confidence. Obama also helped out by inviting Congressional leaders to the White House this week to discuss the economy and looming fiscal cliff-hanger.

The UK 100 index is trading down around 1-month lows of 5750. Support? Or pause before continued correction to long term rising support around 5600? Plenty of fears to fuel such a correction, but good news from Greece and Spain could easily fuel a relief rally after the falls of late.

In FX, GBP/USD still in 2-month downtrend, testing the 1.58 handle for the first time since early September. EUR/USD following a similar path, with a test of the 1.27. GBP/EUR looks to have found support at a trendline of rising lows around 1.25. In commodities, Gold settled around $1735, after a rally from $1670 following the US election. It now looks like a steep trendline of support in place.  Crude Oil fallen back to $86, but with support from the last week around $84. Brent Crude also faltered before $110, with support around $106/107.

In focus this week will be on growth and inflation, but with focus back on the eurozone and its finance ministers for response to on-going debt crisis. The Greek finance juggling will attract much interest with the prospect of default so close. The Bank of England’s (BoE) inflation report may provide more information on the next quantitative easing (QE). Eurozone GDP is expected to show continued contraction. Inflation data is aplenty across the world, potentially impacting growth sentiment.

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

• China               Trade Balance                         Better
• China               Exports                                    Better
• China               Imports                                    Worse
• Japan               GDP                                         In-line
• Aussie              Home Loans                            Worse
• Japan               Machine Tool Orders              In-line
• Germany         Wholesale Price Index                        Mixed
• See Live Macro calendar for all details

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

• Insurer Catlin says 9-month sales up 11 pct
• Wincanton Group Finance Director Jon Kempster steps down
• Interserve posts Q3 in line with expectations
• Cobham warns 2013 sales to fall on U.S. defence slowdown
• Bovis Homes says on track to strong revenue increase
• Kentz sees 2012 earnings in line with expectations
• Heritage Oil to exit Kurdistan through sale to Genel
• Genel to acquire further stake in Kurdistan gas field
• Wincanton H1 profit before tax 13 mln stg
• Housebuilder Taylor Wimpey says trading improving
• Providence sees more oil at Drombeg
• Redrow sales per outlet up marginally
• Aveva well positioned after H1 profit rises 10 pct
• Corin agrees 31 mln stg takeover deal
• Genel to farm in to Somaliland block
• Hibu suspends lender payments pending capital restructuring
• Antrim says production has commenced from the Causeway field
• Firstgroup sells Birkenhead and Chester bus businesses
• Dignity third-quarter profit rises 10 percent
• Gem Diamonds says from Oct rough diamond prices showing positive trend
• Vodafone Qatar says customer base up 7 pct in Q2