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

UK 100 called to open +10pts (new 5yr highs) with risk-on sentiment persisting in Asia (following US and Europe) helped by all three BoJ nominees being approved by parliament, allowing a move to aggressive easing in order to reflate the struggling economy and meet the bank’s new and likely far off 2% inflation target.

Speculation still abound as to whether an emergency BoJ policy meeting takes place before month-end and next official meeting in early April. Regional optimism also helped by Japanese government raising economic assessment to make it a hat-trick of monthly upgrades. China equities rebounded after new PM confirmed.

US markets closed higher helped by better Jobless Claims reading (another fall in weekly and continuing claims), dovetailing nicely from last week’s Non-Farm payrolls and leading to thought that the US labour market is recovering and even gaining momentum. After good retail sales figures, more evidence looked for from Uni of Michigan this afternoon.

The Dow Jones extended winning streak to 10 days, its longest since November 1996 and the S&P 500 is but two points off its all-time high. US gains helped by Fed passing 14 of 18 largest banks’ capital plans (dividends, share buybacks) following stress tests, although some big names including Goldman Sachs and JPMorgan saw theirs receive only conditional approval based on significant disagreement on potential losses under stressed market conditions.

As for the EU summit in Brussels, information thin on the ground although it would appear to see continued support from austerity and need for fiscal discipline, but some additional support for growth and a renewed focus on unemployment. Juncker believes the Cyprus bailout overhang can be resolved by the weekend (in contrast to Merkel’s comments yesterday). More to follow today.

Overnight (with a lack of data) outgoing BoE governor King said the bank on ITV News was not trying to weaken GBP and that Sterling is now appropriately valued (scared of further weakness importing inflation and squeezing households yet more) and the nation’s recovery in sight. This has helped GBP/USD back up above 1.50 and beyond 1.51.

In focus today will be Eurozone Consumer Price Inflation and any impact it may have on the single currency with many still calling for a rate cut to help boost the region’s growth. The LTRO early repayment announcement from the ECB has lost its novelty. Note that the Italian Parliament reconvenes to try and form some sort of coalition, and break the election deadlock from last month.

In the afternoon, US Consumer Price Inflation also looked to for signs of economic growth, with consensus looking for an increase nearer to the Fed’s target. US Industrial Production seen rebounding after a negative Jan and Uni of Michigan Consumer Confidence seen continuing its northward March.

UK 100 rallied back above most recent high (6535), and thus made a new 5yr high overnight after recovering strongly and quickly over last two days from its recent correction. Is the pause over? Is the uptrend to resume? Will it be continued grind higher or could we see more pronounced moves higher?  Risk appetite still there, but many still discussing the possibility that slow advances suggests overbought.

In FX, the GBP/USD broken back above 1.50 (see above) on Mervyn King’s comments about appropriate valuation trumping the USD demand. Support possible at 1.50, although GBP still has headwind of USD now being in demand based on economic recovery prospects (positive correlation) and stimulus removal rather than safe-haven seeking of last few years amid crisis. EUR/USD back up above 1.30 with support at 200-day moving average 1.296 as declines of late against USD (like with GBP) are stemmed.

In commodities, Gold stuck around $1590 with $1600 looking like a hurdle as the metal sits in a sideways consolidation range with more stable economic data of late reducing the metal’s appeal as a sanctuary. Watch for rebound by GBP and EUR weakening the USD and helping the metal. In Oil, US Light Crude back up at recent highs of $93.7 although gains have slowed up. Brent Crude recovered from lows of $108 to test $109.5.

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

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

• Rentokil profit up 10.1 pct, City Link still weighs
• Exillon Energy says reserves soar 96 pct
• Exillon Energy says reserves rise to 520 mln barrels
• Synthomer FY pretax profit 98.1 mln stg
• Bwin.party 2012 earnings down 17 pct
• APR Energy announces new 250mw contract in Libya
• Wetherspoon profit dips as higher costs hit margins