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

UK 100 called to open +20pts at 6740, testing last week’s highs, helped by a buoyant session in Asia, itself supported by another positive finish in the US on Friday, and another record high for the S&P 500 on continued hopes that disappointing macro data (Durable Goods, Consumer Sentiment) will force the Fed to maintain its stimulus programme.

In China, the money-markets crunch situation persists as the PBOC (central bank) continues to refrain from injecting funds into the system to relieve the stress, although some market participants see it as an increasing sign of economic strength following the Q3 GDP rebound than financial sector weakness. Note industrial profits growth accelerated in September.

 Over the weekend there are reports (FT, CNBC) that Republican Senator Rand Paul is threatening to put a hold on Fed Chair successor Yellen’s nomination although he has done this before and it’s not proved a hurdle. The EU summit saw Merkel signal that ECB President Draghi supports a banking union.

 Talks on a German coalition continue. The ECB’s Asmussen suggests that Italy will decide the Eurozone’s fate while Fitch affirmed its BBB+ rating, and the ECB’s Coure said Europe’s challenges include growth, cleaning up banks, protectionism and using spare capacity.

 In focus today, we have UK CBI Sales which are seen pretty much flat, and a host of US updates which may help or hinder the view on the outlook for Fed stimulus: US industrial and Manufacturing Production and Capacity Use seen improving slightly and US Pending Home Sales rebounding after a weak August.

 The Dallas Fed Manufacturing Activity. Could the latter show a rebound like its Kansas peer last week? Then after the US close we have the market darling Apple reporting Q4 and FY results. Will the financials please as much as the product launches of late? Can the tech heavyweight join the consensus beaters as investors look for signs of economic recovery?

 The UK 100 continues to probe higher, futures getting above the 6735 level of Friday to test 6750. We note rising support still valid at 6730. Momentum may have dropped, but the index keeps squeezing out more progress. Support also likely around 6700, then 6660.

 In FX, USD basket trading sideways around 79.3 off its recent 79.1-2 lows. GBP/USD holding around 1.618 after declines on Friday from recent multi-month highs. Resistance at falling highs from Aug 2009. EUR/USD holding recent gains at 1.38. Is 1.40 possible? USD/JPY rebounded to above 97.5, benefiting Nikkei exporters.

 Gold slowed up at $1350 as USD finds support. While we had seen potential for a move to $1370, the time spent at $1350, limited progress since and trendline of falling highs since mid-March may limit this to $1365. Oils up off lows with US Light at $97.5 and Brent above $107.

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