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

***Sorry for delayed release this morning – technical issue***

UK 100 called to open -100pts at 6210, surpassing our expectations of the correction going as far as April-lows of 6220 (which it did overnight) and opening up the possibility of a return to 2011 highs of 6140 (-10.7% from May highs) and possibly even 6050 (-12%) – the 4yr trendline of rising support from crisis lows.

Global sentiment still dominated by uncertainty regarding the future of central bank stimulus (Fed meeting next week, lots data this week) and its effectiveness in light of mixed macro data, impacting both developed and emerging markets. Dented further yesterday by revival of fears on Greece after MSCI downgrade and potential vote of confidence on the ruling coalition after it shut the national broadcaster.

Asian markets lower overnight after negative US handover, with Japan’s Nikkei suffering another painful rout (-6%, back into bear market territory -20% from highs) exacerbated by safehaven seeking in the JPY (down to 94.5 v USD) and Chinese markets lower after holidays and digesting weekend data disappointments.

Overnight data saw better Aussie unemployment figures, but nothing that could help the bourse out of negative territory, although it is outperforming major regional peers. The World Bank also cut its 2013 global growth forecast to 2.2% from 2.4% (hesitant and uneven recovery) but raised the US and Japan adding to fears of less stimulus. It cut China and the Eurozone.

In focus today we have US Weekly Jobless Claims which will be looked to for any big swing from the recent average in terms of affecting views on QE3 and tapering. US Retail Sales is the big number of the day showing whether US consumers feel flush enough to spend, with consensus expecting improvements to April’s data. Lastly, US Business Inventories are seen a touch higher in April.

UK 100 broken below expected support at April lows of 6220 and downtrend from May high preserved via trendline over falling highs at a now distant 6350. Potential for correction to persist to 2011 highs of 6140 then 4yr rising support around 6050. Short-term trading requiring examination of longer term graphs.

In FX, GBP/USD trading 4-month highs testing 1.57 with the USD shunned on uncertainty over QE3. EUR/USD keeps probing higher, almost to 1.34 overnight, with QE3 fears trumping Eurozone woes, and possibly some optimism regarding the single currency. USD/JPY fallen <95 to test 94 hindering Nikkei exporters. Next support April lows 92.5-92.7.

 Gold halted by 200-day moving average $1394 overnight and failing to regain $1400 despite weaker USD. Support possible at yesterday’s lows $1365, then $1340 April and May lows.

In the Oil world, US light Crude back at $95.5 after testing 1-month highs $96.5 yesterday and back trying to revive uptrend. Support $94.5. Fears over global growth, should stimulus be removed, weighing on advances. Same story with Brent Crude, but it failed to retest last week’s highs of $104.5 and a lower high of $104 suggests potential loss of momentum. Support $102.

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