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

UK 100 called to open -10pts, with Asian markets higher thanks to better-than-expected Japanese Industrial Output and the Yen (JPY) remaining weak after cabinet approval of a second stimulus package in two months, both helping send the Nikkei 225 index to multi-month highs.

Optimism from Asia appears to have offset what is, as suggested yesterday, a continued swing in commentary regarding the US fiscal cliff. Having been so positive on things yesterday, risk-appetite was tempered later by renewed uncertainty following the President’s opening bid in budget talks being described as ‘unbalanced and unreasonable’ by Republicans. These comments countered by optimism from others. Progress?

Overnight macro data also shows an improvement in UK Consumer Confidence to an 18-month high. German Retail sales, however, collapsed in October, with growth well below expectations.

For those banking on emerging markets to buoy global growth, note more bad news from India with Q3 GDP growth continuing to slow (just 5.3% vs. 5.5% in Q2), held back by manufacturing and agriculture. However, further evidence emerged from China that it might have seen the worst of its slowing after MNI Business sentiment saw a third consecutive improvement in November.

Focus back on Eurozone debt crisis today with Germany voting on Greece’s aid package with a positive outcome expected for Athens. However, there is talk (Telegraph) of the deal fraying and the IMF threatening a walk-out after the supposed ‘technicalities’ which needed ironing out have proved a stumbling block (notably to banks and pension funds balking at losses).

Yesterday’s rally on Fiscal cliff optimism saw the index move nearer to the level of long term falling highs and potential resistance at 5915. Positive is the limited weakening since Republicans declared the President’s budget offer no good, which suggests markets want to push on. Having broken above 5840, this may revert to support. As we have asked recently, is all the bad news out there? Is there more chance of positive news sending us higher than bad news spoiling the party?

In FX, the GBP/USD has risen again overnight to break 1.605 on pessimism regarding the US, the fiscal cliff and its effect on the reserve currency Greenback. The FX pair remains in an uptrend since mid-November. The same move has taken place in EUR/USD with a break back above 1.30, on a combination of US pessimism and Euro optimism.

In commodities, Gold remains in its uptrend from recent lows at 1705. Although it is likely to continue bouncing around on account of the USD itself swinging on Fiscal cliff commentary. Resistance likely at last week’s and mid-Oct’s high of $1755. The Oils (US Light Crude and Brent Crude) have got a bid overnight after the USD weakened, with the former regaining $88 and the latter above $110.5, closing in on recent highs of $88.5 and $112, respectively.

In focus today will be Eurozone Unemployment which is seen rising to 11.7% from 11.6% as austerity and slowing growth in the region bites. Consumer Inflation (CPI) in the region however, is seen easing from 2.5% to 2.4%, helping offset slower wage growth. In the afternoon, US Personal income and spending is seen posting slower growth than last month. This follows the slower, and slower than expected, Personal Consumption figure reported yesterday for Q3.

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – all part of the service.

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

• UK                    Consumer Confidence                        Better
• China               MNI Business Sentiment         Improved
• Japan               Housing Starts                         Better
• Japan               Vehicle Production                  Weak, unchanged
• Japan               Construction Orders               Deteriorated
• Germany         Retail Sales                             Worse
• See Live Macro calendar for all details

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

• Fastjet says demand on Tanzania routes outstripping supply
• Sportingbet says full-year results to meet expectations
• SThree sees full-year profit in line with market estimates
• British Land signs Aramco at 10 Portman Square
• CSR says tender offer fully subscribed
• Harvey Nash upgrades profit forecast
• Theo Fennell says EME Capital offer deadline extended to Jan 11
• Geopark says Chile well drill successful
• Petro Matad says CEO steps down