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

UK 100 called to open +10pts, with Asian bourses pushing higher after a resilient performance from Europe and the US as renewed political uncertainty (Italy + Spain) in the Eurozone was cast aside. Help arrived in the form of continued improving macro data – this time from Eurozone & China PMI Services as well as US ISM Manufacturing (employment component at 7yr high).

Japan’s Nikkei the start performer overnight (12-month highs) after BoJ governor Sharikawa tendered early resignation, bringing forward strong monetary stimulus by a more dovish successor, driven by new PM Abe. The JPY weakened again to 3yr lows against the USD, benefiting exporters and equities. The IMF has also backed Japan’s new 2% inflation target.

Overnight macro data limited to UK Shop Price Index which showed growth in January, but less than half that reported in December, easing the pressure on UK consumers. Australian Retail Sales worse than expected, failing to rebound and in fact weakening since November, making it the longest period of decline for 13 years and reigniting calls for interest rate cuts, weighing on the AUD.

Note also heightening of geopolitical tensions between China and Japan after the former alleged that its frigates fixed weapons-targeting radar at Japan’s navy, in the on-going dispute over uninhabited islands in the South China Sea. News condemned by Japanese PM Abe as ‘provocative’. This adds to a slightly less settled situation between Israel and Syria in the Middle East of late.

As the March 1 deadline approaches, Obama has called on congress to pass a smaller spending cuts package and tax reforms (short-term fix) if a bigger package cannot be agreed in time. Expect this theme to ramp up again as it did in December. US and global sentiment also buoyed by M&A news that Dell’s was preparing to go private in a $24.4bn buy-out deal.

In focus today will be German Factory Orders which will be looked to for continued evidence to support the better ZEW, IFO & PMI data of late from the region’s supposed backbone. Expectations are for a rebound in growth in December, which could maintain the appetite for risk yesterday.

UK 100 futures regained the 6280 level and traded above it overnight, although we note overnight highs were no better than the 6298 highs of yesterday, just shy of the likely psychological 6300 level. The rally from yesterday’s lows suggests traders willing to put to one side Europe’s continuing woes, thanks to better and improving global macro outlook, but the short term graph still shows a series of steep falling lows towards 6150 dominating after the selloff from the shallow rising highs at 6350.

In FX, GBP/USD been testing long-term (4yr) rising support at 1.565, with a combination of improving US data benefiting the USD and troubled UK growth denting the GBP. A decisive break below this level could open up downside to 1.525 lows of last June. EUR/USD found resistance at 1.36 overnight after a recovery from lows of 1.345 yesterday as Eurozone worries dismissed. GBP/EUR traded in a wide range 1.15-1.17 yesterday, and now finds itself down at the lower end (1.155).

In Commodities, Gold tried above $1685 yesterday, but USD strength means we are back towards $1670 again. Still in tight $1660-1685 range. In Oil, US Light Crude sold back from $97 on dollar strength. Brent Crude tried above $117 again amid continued uptrend. Note differential between two oil prices had reached its widest this year as concerns grow over bottlenecks in North US pipelines.

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 Macro Data: (Source: Reuters/DJ Newswires)

• UK                    BRC Shop Price Index             Growth slowed
• Aussie              Retail Sales                             Worse
• See Live Macro calendar for all details

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

• Elan restructures Tysabri collaboration with Biogen Idec
• Hargreaves Lansdown assets pass 30 bln stg level
• Balfour Beatty wins 64 mln stg Dubai airport contract
• Daily Mail Q1 revenues up 3 pct year-on-year
• Homeserve trading in line with market expectations
• Grainger 4 mths to Jan 31 completed group sales 64.6 mln stg
• ENRC says production of key commodities rises in Q4
• Britain’s RBS expects “significant” Libor penalties
• Flybe agrees aircraft, routes deal with Ryanair
• Lamprell says wins new contract with Jindal Group
• EasyJet’s January passenger traffic up 4 percent
• Healthcare Locums gets takeover proposal
• Atkins says Middle East contract negotiations ongoing
• Victoria Oil & Gas raises 23 mln stg to fund 2013 plans
• BP objects to oil spill price tag sought by US states
• SSE sells wind farms to Greencoat fund for 140 mln stg