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

UK 100 called to open -5pts, after mixed session by Asian equities (Japan giving up some of yesterday’s gains) and muted trading range by futures overnight as risk appetite continues to be tempered by political worries in Eurozone (Spain + Italy) and ahead of ECB’s Draghi’s comments today.

Tensions also strained in US on fiscal front as fiscal cliff talks pick up again as we approach sequester (major government spending cut) deadline on 1 Mar and Obama turned on business community by proposing tax increases as short-term fix to avoid spending cuts. House Speaker Boehner says he will oppose any delay in automatic spending cuts.

Data overnight saw better Australian Employment but worse Construction index. Mixed signals will leave expectations on interest rate moves unclear after prior day’s weak Retail figures. Note AUD found support at 1.03 against USD. Japanese Machine Orders beat expectations and there were improvements in sentiment indices. In Ireland, the lower house approved the bill to liquidate former Anglo Irish Bank by 13 votes to 36 which could boost its bailout exit by cutting debt costs.

In focus today will be the central bank decisions, although with no change expected, the real driver could come from the press conference from the ECB’s Draghi (especially regarding the recent strengthening of the EUR) and the incoming BoE Governor Carney’s testimony to Treasury select Committee (TLS) on his strategy to revive UK growth.

Data-wise, updates on UK and German Industrial & Manufacturing production are expected to show improvements, although the improvement in year-on-year growth in Germany is seen as very strong while in the UK it is likely still depressed. US Jobless Claims will likely remain around their recent average.

UK 100 futures hanging around 6300 level again in a narrowing range. Potential rising support at 6280, but resistance likely at yesterday’s high of 6320. Falling highs can also be drawn from 6360 highs down across 6320 and 6300. Improved global macro outlook theme may have run its course as focus returns to underlying issues (political instability and US fiscal headwinds).

In FX, GBP/USD tested long-term (4yr) rising support at 1.565 but found some support. Still in downtrend from 1.63 at beginning of year. EUR/USD also found support around 1.35 after sharp sell-off from highs of 1.37, and after rally from 1.3 at the beginning of the year. Uptrend still intact, support at 1.33. GBP/EUR still in middle of recent 1.15-1.17 range. BoE and ECB comments today could be drivers.

In Commodities, Gold rallied back towards recent $1680 highs and rising lows could indicate some support. In Oil, US Light Crude found resistance again around $97. Brent Crude still in uptrend, but found resistance around $117 for third time this month.

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

• Aussie              NAB Business Confidence       Deteriorated
• Aussie              Employment Change              Better
• Aussie              Unemployment rate               Better
• Japan               Leading Index                          Worse
• Japan               Coincident Index                     Better
• Switz                Seco Consumer Confidence    Better
• See Live Macro calendar for all details

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

• Dairy Crest says trading remains in line with expectations
• TUI Travel Q1 operating loss widens
• Ocado year EBITDA up 23.9 pct
• ICAP sounds positive outlook despite slow year-end
• Compass Q1 organic revenue up almost 6 pct
• Compass Chairman Roy Gardner to retire
• Afferro says talks with Jindal end
• Thomas Cook says turnaround plans on track
• McBride first-half operating profit up 13 pct
• Weak trading across Europe hits Vodafone
• Cosalt says may enter insolvency before Feb. 28 without new funding
• Burberry CFO Stacey Cartwright to step down
• Burberry names John Smith as COO
• SuperGroup Q3 sales up 12.3 pct, to meet year expectations
• Smith & Nephew Q4 beats market consensus
• Beazley in talks over possible bond issue
• Ophir Energy reports successful appraisal at Mzia
• Bellway expects FY volumes to grow 5 pct, further profit growth
• National Express wins German rail contracts
• Punch Taverns says has identified restructuring solutions
• Insurer Beazley says FY profit quadruples