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

  UK 100 called to open flat at 6635, with Asian markets mixed as last week’s Bernanke-relief gains failed to be capitalised upon. This was despite Japan’s PM Abe’s LDP party gaining control of the upper house, which should allow easier implementation of his 3-arrow strategy for growth revival, with the stronger JPY keeping a lid on equities, notably exporters. China interest rate reform (a rare occurrence) amid fears of slowing growth helping Australia to outperform.

Eurozone woes back to the fore after the Portuguese ruling coalition failed to agree on austerity measures, although a snap election has been ruled out. At the G20 meeting of finance ministers and central bankers Moscow, there was agreement, with jobs and economic growth having priority over austerity and that future policy changes need careful wording to avoid volatility.

 Note US markets have contributed to the slow start to this week, closing flat to down on Friday after on disappointing Q2 results from the tech sector overpowering the stronger results from the banks.

In focus today (aside the Duchess of Cambridge being admitted to hospital with early signs of labour), amid a very quiet calendar, will be the fallout from the Portuguese political situation. US Chicago Fed National Activity Index as well as US Existing Home Sales, while Q2 results continue to flow though with today seeing updates from Haliburton, Kimberly Clark, McDonalds, Netflix and Texas Instruments.

Looking at the rest of the week, Chinese Manufacturing PMI the latest update since the slower GDP. Potential for big reaction. Eurozone PMI Manufacturing and Services readings are seen showing slight improvements and a further edging back towards the key ‘50’ breakeven, however, any deterioration will likely lead to further fears of the impact of a slowing China. US PMI Manufacturing seen improving to above 52.

German IFO surveys expected to edge higher also, while the first estimate for the UK Q2 GDP is seen a healthy 0.6% QoQ/1.4% YoY, up from 0.3% in Q1, helped by positive data run of late, although the Services sector is seen pretty much unchanged in May. US Durables Goods Orders seen normalising after the May jump.

The UK 100 ’s rebound from end-June retains its rising support after a fourth touch of the trendline. Resistance around 6660 still a hurdle to beat, with an overnight attempt failing just shy. Slower ascent and struggle at 6660 could be a worry in terms of lost momentum, but could also be a good sign with the almost sideways move continuing to consolidate the sharp gains of the last 3-4 weeks.

In FX, GBP/USD uptrend from 9-Jul intact testing 1.53 which was support-turned-resistance on 3 July. Back at mid-range of 3-month sideways trend. Break above 1.53 could open up 1.55 or even 1.57 3-month highs. Support possible now at 1.52. EUR/USD also in middle of 3-month range. Struggling around 1.315 again. Break above 1.32 could open up 3-month highs 1.34.

In Commodities, Gold finally broken up above $1300 to test $1320. Recent sideways period served as build-up of energy. Falling highs from $1420 broken, but possible hurdle at $1340 with falling highs from $1480. US Light Crude Oil maintains uptrend, above $108 and with potential to retest $109. Brent Crude off its best levels and sideways around $108.5. Momentum flagging? Spread between the two evaporated.

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

• Japan       Supermarket Sales              Improved

See Live Macro calendar for all details

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

• Gulf Keystone moves to end spat with shareholders
• Dialight says expects full-year results in line with market expectations
• Elementis says Robert Beeston to retire as chairman July 31
• Segro sells business park to Oaktree-Patrizia JV for £245m
• Volex names Nick Parker as new CFO
• GSK says senior executives appear to have broken Chinese law
• Soco says new TGT well in Vietnam finds oil
• Bahamas Petroleum says licences renewed
• Renovo agrees 19 mln stg Ultimate Finance Group deal
• African Minerals appoints David Cockerill as vice-chairman