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

UK 100 called to open -15pts, with Asian markets flicking the risk–off switch, electing to take some profits off the table ahead of Christmas, notably after Japan’s Nikkei regained the 10,000 level for the first time in 8 months, and doubts began to re-emerge on the ultimate outcome of Washington’s news-flow dominating US fiscal cliff negotiations.

Overnight, the Bank of Japan (BoJ) left interest rates unchanged as expected and added ¥10 to its asset purchase (QE) and lending programme. It also offered a gloomy outlook on the economy in 2013 and would evaluate its inflation target at its next meeting. Elsewhere in the region, after a recent change of power in Japan, we had another change in South Korea.

Macro data overnight showed a decline in New Zealand Business Confidence but an improvement in the Chinese Conference Board Leading Economic Index, albeit slower growth than last month. This morning, German Producer Prices were in-line, while the Swiss Trade Surplus expanded further against consensus for a decline.

US markets provided Asia with its negative handover having hit levels last seen on 22 Oct, buoyed by optimism on the fiscal cliff. This optimism has again been reversed as hopes of a deal were hit following comments from both the President and House Speaker, the former saying he will veto the latter’s plan B to avoid tax hikes and believes he has already given more ground planned.

The UK 100 made new highs again on fiscal cliff optimism, Greek bonds being acceptable again as collateral at the ECB following S&Ps post debt-buyback upgrade and a good reading from Germany’s IFO business sentiment index. We now have some rising lows to contend with, helping with the possible attempt at 6000 and while the fiscal is likely to keep swaying risk appetite, support is still available at 5920.

In focus today will be UK Retail Sales with a growth rebound in November anticipated by consensus. While Month-on-month growth is seen at 0.4% for both sales including and excluding fuel, the year-on-year figures are seen accelerating and maintaining a big differential on account of fuel price increases. In the afternoon, US GDP seen revised a touch higher, but Consumption unchanged and Weekly Jobless Claims rising after last week’s drop. Eurozone Consumer Confidence expected flat, while Philadelphia Fed seen improving and Housing data indicating solid growth.

In FX, GBP/USD has come back off its highs of 1.63 (matching those of late September), shedding gains on some risk aversion surrounding the fiscal cliff. EUR/USD also come back after its spike to above 1.33, boosted by a combination of the better German business survey and relative weakness of the US. GBP/EUR remains depressed around 3-month lows of 1.23 on account of EUR strength.

In Commodities, the Oils have maintained their upward trend. Brent Crude is back at $110 having touched $110.5 late yesterday while US Light Crude remains around $88. Gold remains under pressure down around its 200-day moving average at $1664, although risk aversion overnight looks to have provided some support despite USD strengthening.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – all part of the service.

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

• China               Conf Board Leading Econ Index          Improved
• Germany         Producer Price Inflation                      In-line
• Switz                Trade Balance                                     Better
• See Live Macro calendar for all details

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

• Seven companies enter British 4G airwaves race – Ofcom
• Two UK insurers eye $300 million Sandy losses
• Rambler Metals & Mining: Q1 Results 2013 & Operational Highlights
• Weir Group acquires U.S. oil equipment firm for initial $240m
• Chariot Oil CEO steps down
• Security firm Mortice names new CEO and CFO
• Chemring US. unit wins $32m orders
• Herencia Resources upgrades Paguanta resources
• Bellzone Mining upgrades Kalia resources
• Serco Group on track to meet 2012 expectations
• Balfour Beatty JV wins £270m Hong Kong contract
• Pace fails to land Google set-top box unit