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

UK 100 called to open +15pts, helped by buoyant mood in Asia-Pacific off the back of last week’s broad market confidence. This is also despite Japan’s Nikkei giving up some of its BoJ-fuelled Friday gains (return to 11,000 level was a major test) having starting the week in the blue on continued political-talking-down of the JPY to help exporters and boost economic growth and after higher 2013/14 GDP forecasts (2.5%) from the government and an 0.5% inflation expectation part way towards its new 2.0% target.

Equities in China hit 7-month highs helped by overnight Industrial Profits data improving for the fourth month in a row, boosting hopes that the world’s #2 economy is on the mend. UK consumer sentiment helped by housing data a little less weak in January than in December.

Asian gains fuelled by a positive finish to the week for US bourses (and Europe) despite the solid trend of macro data being bucked by US New Home Sales and focus moving to the Fed this week and unemployment updates in the form of Non-Farms (see below). Note, however that the fiscal progress from the debt ceiling extension is being overshadowed by the Republicans digging their heels in again on spending cuts. Cue a rekindling of the wrangling we had previously.

In focus today will be the US Durable Goods Orders this afternoon where growth is seen accelerating, but slowing when transport is excluded. The data is important as it provide information on big ticket spending and thus consumer/commercial confidence. US Pending Home Sales are also expected to show monthly growth slowing up from November’s strong gains. Watch out also for Q4 results from Caterpillar, given the worries over slowing demand from China. Any evidence that demand/orders for heavy machinery required for mining could buoy global risk appetite.

For the rest of the week, many eyes may be on the US Federal Reserve (Fed)’s first policy meeting of 2013, however, after the big December changes ($85bn/month, opened-ended, unemployment target of 6.5%) little should be expected in the way of policy moves this early in the year. US Non-Farm Payrolls on Friday is thus major highlight and after a few good months (incl. upward revisions to the prior month) with potential for more of the same, although the 7.8% unemployment rate is likely unchanged despite jobless claims dropping over the last two weeks.

US GDP is seen slowing from 3.1% to 1.2% on the back of the storm effect while Eurozone PMI final reading will likely confirm last week’s surprises from Germany and the Eurozone, although unemployment in the region is seen rising. UK Manufacturing PMI should stay in expansion, although with a small tick back.

UK 100 futures retain their positive bias as we move into the new week, and came within a whisker of 6300 overnight. Support available at 6260 helped by optimism running highs, resistance at round number 6300. The sceptic in me asks “too high?” The graph-watcher says “the trend is your friend”.

In FX, GBP/USD broken still in decline, eyeing up near-4-year lows at 1.565 on US optimism trumping prospect of more QE from the BoE after the negative Q4 GDP reading and loss of Sterling’s prized AAA rating. EUR/USD turned back just shy of 1.35 level as USD strengthens and EUR gives up some of its recent strong gains. GBP/EUR broken below 1.17 level as GBP weakness continues As proffered last week, support here, or correction all the way back to 4-year rising lows at 1.14?

In Commodities, Gold has bounced off 1655 after sharp declines of Thurs-Friday as USD strengthened. In Oil, US Light Crude back at $96 and remaining in in $95-97 range, while Brent Crude is testing its 7-day trend of rising lows and support at $113.25.

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

• China               Industrial Profits                                 Improved
• Japan               Corporate Service Price Index            Better
• UK                    Hometrack House Prices                    Improved
• See Live Macro calendar for all details

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

• Aveva says continuing to perform well
• Gavin Darby replaces Clarke at Premier Foods
• Filtronic says expects profit boost from wireless
• SThree full-year pretax profit 25.3 mln stg
• Mitie Q3 trading in line with its expectations
• Porvair year profit up 40 pct; outlook positive
• Borders & Southern eyes more drilling to prove up Darwin