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

UK 100 called to open -20pts, after US markets closed lower thanks to a US Federal Reserve (Fed) committee member dashing hopes of additional monetary stimulus, saying the Federal Open Market Committee (FOMC) minutes published on Wednesday, and which boosted market risk appetite, were stale, not taking into account the recent improvement in US macro data.

His comments were reinforced by better-than-expected data in US housing, PMI manufacturing and unemployment, which, although nice to see being positive, are far from strong growth and the market’s desire for some extra help remains ravenous. If we wanted any idea of how long we might have to wait for ‘help’, Presidential candidate Romney said he would want a new Fed Chairman and felt that QE3 (3^rd round of monetary stimulus) should be avoided.

Expectations of Fed Chairman Bernanke making a stimulus announcement at next month’s FOMC meeting (13 Sept), are thus reduced as is the chance he uses the Jackson Hole Economic Symposium  (31 Aug) as he has done in the past (2010, for QE2). A nice market analogy is “we’re all still sitting in a big stimulus waiting room, with same crap magazines being passed around, and the queue just getting longer”.

Risk was helped briefly by talk of Spain discussing the terms of financial aid with the Eurozone, however, as might be expected, this was quickly denied by both parties, bar talks on existing bank sector support. Sentiment dented by poor European Manufacturing and Services PMI figures (Q3 will probably be a tough one) and a spat between Germany and Greece with the former saying the latter must respect exiting rules and timelines and the latter saying that the former much stop speculating on a Greek exit from the eurozone.

Markets also still a little unhappy that no decision on any possible extension to payback timelines for Greece will be made before the Troika’s (IMF, EC & ECB) September report. Greek PM Samaras meeting Merkel today and Hollande tomorrow. Oh to be a fly on the wall.

Asian markets have taken negative baton from Wall St, moving lower on global growth concerns and uncertainty over whether central banks will introduce more stimulus. Yesterday’s weak China manufacturing data still weighing on sentiment, and overnight the MNI Business sentiment indicator dropped back highlighting that Chinese business conditions worsened in August. Conflicting messages persist from China about what the People Bank of China (PBOC) might or might not do.

In the Commodities Gold back off its highs after the rally on monetary stimulus expectations. Note the slow-up of its advance coincides with a falling trendline across the Sept 2011 and Feb 2012 highs. The Oils have also pulled back with US Light Crude near 1-week support but Brent slowing at 2-week rinsing support. In FX, USD stronger vs. GBP, EUR and JPY as Fed stimulus hopes fade, but weaker vs. CHF as the traditional safe haven is sought out.

Today’s macro line-up will focus on the UK’s preliminary Q2 GDP figure which is expected to be revised up from an awful -0.7% advance publication, thanks to a revision of contraction reported in the construction sector and retail sales. Consensus is expecting -0.5%, possibly -0.4%. Any more would be great news. Any worse, and you can guess where the UK 100 might head. The index of Services growth for June will also be of interest, given the sector’s importance to the UK economy.

Later on, US Durable Goods orders could provide the direction for the afternoon with growth expected to have accelerated/recovered (note that the data can be volatile). Good data would likely further quash QE hopes further, but then again good data could also imply growth and recovery. The faltering growth vs need for stimulus conundrum continues. Enjoy.

That’s it for this week’s morning reports. Catch up with my updated thoughts in this afternoon’s Weekly Roundup.

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

• China               Corp Service Price Index                     In-line
• Aussie              Conf Board Leaidng index                  Recovered   
• China               MNU Business Sentiment                   Deteriorated
• See Live Macro calendar for all details

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

• Sirius Minerals – Drilling Update
• Lamprell completes construction of jackup rig Makasib for NDC
• Troubled platinum miner Lonmin appoints acting CEO
• African Minerals cuts forecast at key mine on heavy rainfall
• Centrica drills dry well in Norwegian Sea
• Sable Mining Africa Limited FY12 Pretax Loss Widens
• Max Petroleum FY Pretax Loss Narrows, Focused on Lower Costs
• Anglo Platinum Says Situation Calm, Talks Happening With Workers
• Monitise Enters Subscription Pact With Visa Europe, Visa International
• Faroe Petroleum: Cooper Well Finds Oil But Doesn’t Flow
• Aga Rangemaster Profit Falls as Customers Delay Big Ticket Item Buys
• Jubilee Platinum Formalizes Deal With Indian Pacific Resources