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

UK 100 called to open +20pts, building on last week’s optimism which kept the index above 6000 and 6100 later in the week after significant inflows into global equities, helped by continued talk of monetary stimulus in Asia.

Chinese equities have rebounded on reports that the Shanghai Securities Journal expects strong 8% GDP growth in 2013, while the Bank of Japan (BoJ) and the Japanese Yen (JPY) see continued pressure from new government regarding more extreme measures to boost the struggling economy taking the Nikkei (futures markets – physical market closed for a national holiday) back to 11,000.

In focus today is a limited macro calendar, with just Eurozone Industrial Production as major data, although with a rebound to tepid growth in the month, the chances of a surprise (good or bad) is high. Indeed, after the poor industrial/manufacturing figures from the UK on Friday, the data type highlight the struggles for the sector given the impact of austerity and slower global growth.

Look out also for US Fed Chairman Bernanke speaking at 9pm UK tonight if you are holding positions overnight as he is scheduled to talk about monetary policy, recovery from the financial crisis and the US economy’s long term challenges which could impact the USD and thus risk assets such as equities and commodities, especially with equities running at current highs.

Overnight macro data limited to disappointments from Aussie Home Loans and Job adverts, which could bring about calls for more rate cuts to revive the economy if needed. German Wholesale Prices this morning have also come out weaker than expected, although with a rebound from the weak prior month.

This week focus will increasingly be on the US earnings stream which will see the likes of JPMorgan and Goldman Sachs follow up on last week’s reports from Alcoa and Wells Fargo. Banks likely watched after the consensus beat by the latter, but the devil in the detail (fall in net interest margins) disappointing.

Macro data importance lies with UK and US inflation and retail sales figures with the latter sector’s UK constituents having provided a mixed bag in their Christmas trading updates (online good, high street not so good). Late in the week we have Chinese GDP, Industrial Production and Retail Sales which will all be looked to for signs of improving growth and last week’s data suggesting less wiggle room for policy easing to help with said growth.

In the press this morning, there is an interesting article in the FT about a redraft of the EU bank rescue funding plans with countries not being able to use the fund as an easy solution, being forced to shoulder a large portion of future bailouts if they request aid from the €500bn fund. The presumption that the fund removes the negative feedback loop between sovereigns, bond markets and banks looks like not eradicated just yet. Sentiment also boosted this morning by news of M&A in Europe with France’s St Gobain in talks to sell Verallia (North American glass packaging unit) to Ireland’s Ardagh Group for €1.7bn.

The UK 100 remains above the now key 6100 level trying up to the highs that UK 100 futures saw in 2 May although it is now back off its highs and down near the highs of Friday. Resistance to become support?

In FX, the major move is in EUR/USD which has broken above a trendline of support-turned resistance at 1.33 to test 1.34 overnight. This takes the pair back to highs last seen in early April last year. EUR stronger on account of no rate cuts from ECB. GBP/EUR also showing continued weakness and broken below trendline of falling support at 1.21 on account of EUR strength.

In Commodities, Gold helped by stronger EUR denting the USD and taking Gold back up to near $1670. Oils also helped again by weaker USD, after weakening last week.  US Light crude back up near 1-month highs above $94.0. Brent Crude not faring quite as well, but has regains the $111 handle, just.

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

• Aussie              Home Loans                            Worse
• Aussie              Job Adverts                              Worse – Steeper decline
• Germany         Wholesale Price Index                        Worse
• See Live Macro calendar for all details

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

• Taylor Wimpey says consumer sentiment towards housing improving
• Heathrow’s December traffic up 2 pct yr-on-yr
• OFT extends deadline for A.G. Barr merger with Britvic
• African Minerals appoints Stephan Weber as new COO
• Moss Bros says to beat year forecasts
• Shanks in 750 mln stg deal with Wakefield Council
• Cluff awarded two UK gasification licences
• Ricardo trading in line, remains confident
• Big Yellow says January started positively
• Shanta Gold says has sound base to meet 2013 target
• Afferro says still in talks with potential offeror
• Hammerson chairman Nelson to retire
• Exillon Energy to hold EGM after Worldview request