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

UK 100 called to open +5pts, with Asia-Pacific markets slightly higher helped by better global macro sentiment. Overnight data limited to significantly improved business surveys from Australia and a tick up in Japan’s Small Business Confidence print. Australia’s ASX closed at 21-month highs.

German Import prices this morning show no sign of imported inflation, which will reduce calls for any rate cuts by the ECB, giving the EUR some support, and a bigger than expected improvement in the German GFK Consumer Confidence reading reinforces an improving undertone from the supposed backbone of Europe after recent strong IFO and ZEW surveys.

For those looking to emerging markets to support global growth, note that the Reserve Bank of India (RBI) cut interest rates for the first time in 9 months, while also cutting their GDP forecast pointing to an increasing likelihood of inflation remaining rangebound.

In focus today will be US housing data and US consumer Confidence. The former is seen showing continued and accelerating growth both month-on-month and year-and-year, while the latter is seen falling back from December’s reading. There may also be some follow up on provocative radio comments from the French Labour Minister that France was ‘totally bankrupt’.

US Markets closed slightly lower (Nasdaq up, rebounding after Apple sell-off) with better US Durable Goods Orders being negated by lower Pending Home Sales which has led many to discuss the possibility of market fatigue after the significant gains of late. Improved sentiment on the US fiscal situation helped by Fitch saying debt ceiling suspension removes near-term risk to AAA rating.

UK 100 futures not pushed on much further since 4.30pm with eyes still on the Q4 earnings (tail-end from US, starting in Europe/UK) as well as the Fed’s policy meeting tomorrow. Support now possible around 6300 having spent much of yesterday afternoon above the level, but as mentioned above, fatigue is becoming the buzz-word after the index’s 12.7% rally from mid-November and limited progress overnight.

In FX, GBP/USD found some support at 1.567 after falling from highs of 1.625 at the turn of the year, this a combination of improved attitude towards the US fiscal situation and pessimism towards the UK’s negative growth potentially requiring more QE (exacerbating GBP weakness) as well as nation’s possible AAA rating loss. The bounce was nonetheless ahead of major rising lows at 1.565.

EUR/USD off its 1.348 highs, although still with support, as long running USD-weakness-turned-EUR-optimism slows up after the EUR’s recent boost from news of regional banks repaying cheap ECB lending (LTRO). GBP/EUR also found some support after trying as low as 1.164 on GBP weakness. Still potential for further falls to 4-year rising lows at 1.14, and recent breakdown level of 1.177 becoming resistance.

In Commodities, Gold continued its bounce off lows of $1652 thanks to old trendline of resistance having become support. Resistance still likely at recent highs of $1695 on any subsequent rally. In Oil, US Light Crude testing recent highs of close to $97 on macro optimism and strong EUR/USD. Support in place at $95.5 for any pullback. Brent Crude still in uptrend (8-day) but yesterday’s highs failed to beat the prior day’s suggesting resistance building at $113.8. Support at $112.5.

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

• Aussie              Business Conditions                            Improved
• Aussie              Business Confidence                           Much Improved
• Japan               Small Business Confidence                 Improved
• Germany         Import Prices                                      Worse
• Germany         GFK Consumer Confidence                 Better
• See Live Macro calendar for all details

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

• RBS close to Libor settlement with U.S., UK authorities – WSJ
• Greencore expects core UK market to remain flat
• African Potash buys Congo mining research rights
• Hyder Consulting trading in line, confident on year
• ReNeuron cleared to complete stroke clinical trial
• Next Fifteen Comms expects to meet FY targets
• British Land to “work closely” with Blackstone on any Broadgate sale
• Carpetright Q3 UK sales rise 3.2 pct
• PZ Cussons H1 pretax profit at 44.1 mln stg, up 10 pct
• Anglo American to take $4 bln writedown on Minas-Rio project
• 3i says Jefferies has 1.6 pct stake
• Colefax first half pretax profit falls
• Aquarius Platinum rises sequentially
• Petra Diamonds production up 31 percent
• Chemring wins $28.5 million US Army contract
• National Grid confirms outlook on solid performance