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

UK 100 called to open +20pts, continuing its rebound from yesterday’s FOMC-fuelled sell-off, despite a quiet but mixed Asian session. Still some risk-off sentiment after weak macro data (EU & US) added to negatives from Fed comments.

However, ‘upbeat yet open to rate cuts due to downside risks to global growth’ comments from RBA member Stevens’ testimony helped Australian equities outperform. On the subject of currency wars, he conceded AUD strength was a consideration when discussing interest rates.

After focus on Fed minutes, many Fed members talking and some (Fisher) supporting tapering off of QE sooner rather than later whilst others (Bullard) suggested reductions as labour market improved (little evidence yet) and Williams said powerful accommodation key to boosting hiring. Views divided. Further Fed communications likely to maintain market volatility.

Overnight data limited to Chinese house prices, which showed a rise of 0.8% in January after the small decline in December and breaking the 10-month run of falls, reinforcing possibility of Shanghai tightening policy. German GDP data confirmed at -0.6% QoQ, adding to concerns over Eurozone region as a whole.

In focus today, German IFO Surveys expected to show small improvements – more sentiment data at odds with growth. We get another update on how much of ECB long-term borrowings (LTRO) banks will repay early. Repayments of LTRO1 (Dec-11, 3yrs) expected at €3-5bn again this week, taking total to €155bn of €489bn repaid since 25 Jan. First early repayment of LTRO2 (Mar-12) seen at €125bn (LTRO1 €137bn). Why interesting? Gives idea of how banks able to fund themselves in markets rather than via ECB. Indicates level of stress and confidence in sector.

UK 100 rebounded from visit sub-6300 but slowed up at prior trendline of support, which now looks to have turned resistance. I still wonder whether, despite things settling, whether pause at 6300 is just that and another leg down possible? While some may have called reaction to fed minutes as overdone, macro data (EU & US) doesn’t exactly support removal of stimulus. Downside still possible to 6220 completing yet another flagpole pattern – this time bearish. Watch for 6300 holding though as signs that bullish undertone persists and the 6400 in demand again.

In FX, GBP/USD rebounded back above 1.525 level of long-term support after Fed induced declines yesterday, as dollar favoured. Momentum still low, yet to rebound, but still with rising support. EUR/USD rebounded from 1.32 but slowed up yet again. Further downside with Eurozone macro data weighing?

In Commodities, Gold managed a positive performance yesterday after its bad run of late. Rebound on the cards? Resistance likely at 1600 after breakdown, then $1650. Downside still possible to $1525. In Oils, US Light Crude found support at $93 after strong sell-off, but still in downtrend, while Brent Crude also bounced off 1-month lows of $113.5. Support for both found after steep declines derived from fears over Fed’s accommodative policy and weak Eurozone data. Less growth, less need for oil.

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

• Germany         GDP                 Prior estimates confirmed
• See Live Macro calendar for all details

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

• Mediterranean Oil moves step closer to developing Italy gas field
• BowLeven says latest Cameroon well finds hydrocarbons
• Datong seeking offers through formal sale process
• M&C Hotels annual profit slips 15 pct