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

UK 100 called to open -45pts, with US and Asian markets having turned back from recent highs after minutes from the US Fed’s (Federal Reserve) FOMC (Federal Open Market Committee) indicating policy makers divided and concerned about risks associated with continued QE (quantitative easing).

Some members called for variable purchases according to economic outlook as opposed to the current $85bn/month, while others called for evaluation of QE’s efficacy (inflationary, but not necessarily growth-promoting). Markets dropped back, questioning the opened-endedness of the programme and possibility of what has been a major prop for risk being removed earlier than expected. The USD rallied against peers, which maintained pressure on commodities space and equities in raw-materials-heavy Australia.

Asia also hampered by Chinese concerns over liquidity tightening by the PBOC (central bank) as well as fresh curbs/taxes on the ‘heated’ property market which saw Shanghai equities plunge. There was continued talk of the perils of overinvestment with ratings agency S&P also pointing to returns being below investment levels for last 5 years and creation of downside correction risk.

Equity futures off their worst levels helped by macro data from China helping provide some encouragement that growth and recovery still on track in the world’s #2 economy, with business sentiment jumping strongly in February while the leading index edged up. Central Bank minutes had quite an effect with BoE talking down GBP but Fed comments reinforcing USD recent strength and taking wind out of sails of optimism and risk.

In focus today will be European Flash Services and Manufacturing PMI where expectations are for slight improvements in Eurozone. Help seen from Germany returning to growth in Manufacturing after Services did so last month, but France still remaining under pressure. Spain auctioning debt.

In the afternoon, US inflation seen flat in January and annual level largely unchanged from December while Jobless Claims may have ticked up to the recent average after last week’s surprise drop. US PMI Manufacturing likely still in solid growth territory while Philly Fed seen rebounding to positive and Home Sales weakening a touch. Wal-Mart ad Safeway reporting before the US open, while HP reports after the US close.

UK 100 fallen back from the 6400 level, after a brief foray above, to sit in middle of recent 6300-6400 range. Overall uptrend remains in-tact but risk sentiment taken a knock. Potential to fall back to 6300, but so long as this level holds, the long-term rising trend can be maintained. Over-reaction to US central bank minutes?

In FX, GBP/USD broken below 1.52, breaching support at 1.53 which had held since Sept 10. Dented by both surprising increase in calls by BoE (Bank of England) for more QE weakening GBP and possibility of less QE by US Fed minutes supporting the greenback. Next major lows May 2010 of 1.42, but momentum already down near supportive trendline below rising lows. Resistance likely at breached support. EUR/USD weak on Fed minutes but closing in on trendline of rising support from July 2012 above 1.32. Resistance likely 1.34.

In Commodities, Gold managed a new 7-month low just shy of $1550 overnight, completing the bearish flag pattern we had pointed to earlier in the weak after it paused around $1600 following a decline and break of support at $1650. In Oils, US Light Crude fell back to 1-month lows of $94.5, below its 95.5-$98.5 month range while Brent Crude dropped all the way back to 2-week lows of $115, having topped out at $118 since the middle of the month.

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)

• China               MNI Flash Business Sentiment            Much improved
• China               Conf Board Leading Index                  Continued growth
• See Live Macro calendar for all details

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

• Ashmore – assets under management $71.0 bln
• Mondi’s full-year diluted headline EPS down
• Sports Direct Q3 profit up, says will hit FY target
• Insurer Lancashire FY profit up 8 pct
• Premier Foods posts rise in trading profit
• Go-Ahead H1 profit falls 1.8 pct
• Filtrona full-year profit rises
• Kingfisher to meet profit forecasts though sales worsen
• BAE Systems profit falls 6 pct, U.S. and UK outlook constrained
• Filtrona – buys Ulinco Components AB
• Micro Focus sees full-year earnings in line
• Informa FY pretax profit up 7.3 pct
• L&G agrees insurance deal with BAE pension plan
• Tullow Oil says Uganda Ondyek well dry