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

UK 100 called to open +20pts, with Asian markets following US bourses higher (after a rebound) as investors jumped back on the risk appetite train after US lawmakers and corporate executives (inc Goldman Sachs CEO Blankfein) expressed optimism that a deal can be reached on the US fiscal cliff (they have to, don’t they?), with President Obama even suggesting before Christmas.

This followed earlier downbeat comments and leads us to suggest that markets will likely keep swinging on conflicting comments from Washington, just like we are now used to from Eurozone leaders and from Brussels regarding progress on the Eurozone debt crisis. Then again, mounting expectations of an early present from Capitol Hill could be the driver of the 2012 Santa rally.

Overnight, a positive US Fed Beige Book helped maintain optimism, with moderate consumer  spending growth and economic expansion of ‘measured pace’ on fiscal cliff concerns. Later, disappointing Japanese retail sales failed to derail momentum, even if the provides further evidence that the nation is likely headed back into recessionary territory. Momentum continued to be helped by dovish (unlimited easing) commentary from opposition leader and likely election winner Abe.

Other macro data though was also supportive of optimism, with Australian Capital Expenditure better than expected and Swiss GDP much better. UK House Prices were weaker than expected and showed a slowing of growth on both a monthly and yearly basis.

Ratings agency Moody’s has expressed continued doubts as to Greece’s debt sustainability even after this week’s Brussels deal, adding that the chance of further default on private debt remains high. The German constitutional court has said it will not rule on Europe’s new bailout fund ESM in 2012 and the IMF’s warning on Spanish bank restructuring’s negative impact on growth and Fitch’s warning that poor performance of French fiscal plans could lead to a downgrade highlight how quickly focus will surely move on from Greece.

Yesterday’s recovery took the UK flagship index back to its trendline of recent resistance around 5840. Another failure to break could just reinforce the hurdle. It also leaves the index in a narrow 5770-5840 range. A breakout from 5840 could see upside to long-term falling highs around 5900, however a breakdown could open up the possibility of a correction to 5710.

In FX, the GBP/USD has recovered from its sharp-sell off on fiscal cliff concerns after more positive comments from Obama and corporates. Resistance built at 1.602. Support at yesterday’s lows 1.596. EUR/USD also recovered from yesterday’s lows 1.288 (support), and even exceeded prior day highs 1.294 on combination of less safe haven seeking in the US and some European optimism. Resistance at 1.30.

In commodities, Gold bounced after its sharp sell-off fuelled by fiscal cliff progress scepticism and a stronger USD. Support found at $1705 again. Resistance overnight at $1725. The Oils (US Light Crude and Brent Crude) still weak after breaking recent rising support and yesterday’s stronger USD.

In focus today will be Eurozone Confidence levels where limited progress expected by consensus.  The same is true for German unemployment where less claims are seen, by the rate unchanged. The second estimate of US GDP is seen showing a big revision upwards, rom a sluggish Q2 pace, to growth levels most would be happy with outside of a financial crisis. Cheer likely limited though on prospect of slower Q4 and potentially fiscal-cliff impacted Q1. More US housing data (pending sales) should show a pick-up in growth.

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)

• Australia          New Home Sales                     Rebound
• Australia          Private Capital Expenditure    Better
• Switz                GDP                                         Better
• UK                    Nationwide Housing                Worse
• See Live Macrocalendar for all details

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

• British Land acquires Lancaster site
• Marston’s managed like-for-like sales up 2.0% for 8 weeks to Nov 24
• Pennon Group H1 profit up 3.4 pct
• Shaftesbury Plc profit rises
• Cookson says demerger proposal approved by shareholders
• RPC Group H1 profit up 4 pct
• Waterlogic says full-year profit to be below market estimates
• William Hill triggers option over Playtech’s WHO stake
• Fastjet starts commerical flights in Africa
• Kingfisher profits fall on tough markets, currency
• Hogg Robinson sees year in line
• Balfour Beatty wins Scotland road contract
• Oxford Biomedica says ImaginAb exercises option for licence
• Shore Capital sees operating business profit behind market view
• PayPoint says trading is in line