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

UK 100 called to open -5pts, after strong gains of last week, as another week of Central bank watching kicks off, this time with the focus back on the US Federal Reserve (Fed) and whether it will, in the face of weak jobs data, announce a third round of quantitative easing (money printing, QE3) on Thursday as it has said it was ready to do should data deteriorate when Chairman Bernanke spoke at Jackson Hole recently.

Nonetheless, Friday’s highs in the region of 5,800 suggest the level being a bit of hurdle even in the wake of European Central Bank (ECB) President Draghi announcing unlimited sovereign bond buying and with no preferential treatment, to help reduce borrowing costs of needy nations so long as they request help and adhere to as yet unknown conditions.

This week we also have the big events (both Wednesday) of the German constitutional court deciding on the legality of the new Eurozone bailout fund (ESM – European Stability Mechanism). Despite Germany playing hardball for much of the crisis (no monetising governments by ECB), it is expected that the fund will be approved. In addition, the Dutch election could see a pro-EU party take power, after gaining much support recently.

Data overnight/weekend produced a mixed set from China and Japan with the former showing poor growth but a rebound in its Trade balance on account of lower imports. With economic growth still weak, hopes still high that the country will provide stimulus measures to bolster growth.  In Japan, GDP was weaker than expected but its Trade balance also improved. UK employment confidence did make a strong improvement through.

In Commodities Gold looks to have topped out after its sharp move up on the stronger Euro (crisis solution by ECB?) and the potential for QE3 from the fed this week. In Oil, both Brent Crude and US Light Crude look range bound, although in a fairly wide range implying potential volatility linked to growth expectations. In FX, USD weaker vs GBP and EUR on QE expectations.

In today’s macro line-up, the focus is likely to remain on the issues mentioned above rather than data which is thin after the overnight/weekend dump by Asia.

As always, have a chat with your friendly trader for any other information you require.

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

• China               Consumer Inflation                             In-line
• China               Producer Price Inflation                      Worse
• China               Fixed Asset Investment                       Worse
• China               Industrial Production                         Worse
• China               Retail Sales                                         In-line
• UK                    Lloyds Employment Confidence         Improved
• Japan               GDP                                                     Worse
• Japan               Trade Balance                                     Better
• China               Trade Balance                                     Better
• Japan               Consumer Confidence                                    Better
• Japan               Eco-watcher’s survey                          Mixed
• See Live Macro calendar for all details

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

• Mitchells & Butlers poaches Marston’s exec for CEO
• Range Resources finds oil at Trindad drill
• Dixons Retail offers to buy back debt
• Exillon Energy acquires further licences
• Chariot Oil says Namibia well dry
• Tullow Oil makes first hydrocarbon discovery offshore Kenya
• Bahamas Petroleum says govt confirms licences
• Clean energy firm Kedco to restructure
• Galliford Try signs affordable housing contracts
• Melrose Resources farms out Romania interest
• AB Foods boosted by Primark’s resilient summer
• BG Group CFO to take medical leave of absence
• Glencore lays out final $36 bln bid for Xstrata
• Xstrata to respond to Glencore final offer by Sept 24
• Fenner Sees FY Results in Line with Expectations