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

  UK 100 called to open flat with Asia starting the new weak on the back foot, despite another positive US close, although Japan’s Nikkei has retained upward momentum on continued JPY weakness thanks to a green light form the G7 meeting on Tokyo’s current monetary policies. Note FT article highlighting equity rally but poor Q1 corporate results.

The Wall St Journal article by Hilsenrath on USD strength eventually surfaced late on Friday seeing the topic remain to the fore over the weekend. The piece suggesting Fed officials have a strategy for ending QE3, but this does not imply they are close to tapering adding to hawkish comments of late. USD strength exacerbated by aforementioned JPY weakness.

Overnight data included Japan’s Money Supply better than expected, Aussie Home Loans better than expected, slight improvements in Aussie Business Confidence/Conditions. The big data was the Chinese Industrial Production, Fixed Asset Investment and Retail Sales which were a touch light taking the shine off sentiment, reviving growth concerns (watch commodities).

In focus today will be US Retail Sales for any sign that the US has some bright lights on the horizon with consensus looking for less weak growth than the prior month. US Business Inventories seen growing more than last month. Both could reinforce USD and dent commodities further. Eurozone finance ministers meet this afternoon to agree bailout payments for Cyprus and Greece mid concerns Slovenia is next in-line.

Later in the week, watch out for; Eurozone Industrial Production after France missed and Germany beat; ZEW surveys; Eurozone GDP which is seen staying negative; UK unemployment seen unchanged but earnings still well below inflation; Eurozone inflation showing rate cuts could still be possible; Japan GDP going positive; US Housing starts slowing; US Fed survey day improving.

UK 100 flat around 6620, taking a pause overnight. 1-month uptrend still valid and potential for catch-up to peers still possible, but 3-month graph shows the steepness of the recent ascent, which increasing the chances of brief correction being necessary for it to continue.

 In FX, GBP/USD fell back to near 1.53 on USD strength, helped by JPY weakness and continued Eurozone concerns. EUR/USD finds support at 1.295 although a bounce would require a significant change in sentiment on Eurozone and a ditching of the USD.

 Gold broke out of its sideways $1440-1480 range to test $1420. It recovered to $1450 late on Friday but weakened back to $1430 again. Potential for prior channel base to revert to resistance at $1440. Beware further USD strength hindering the yellow metal’s chances of recovering lost ground, exacerbated by article on talk of Fed having exit strategy for QE3, less need for inflation hedge, and equity rally reducing safehaven demand.

US Light Crude Oil fallen back from resistance around 1-month highs of $96-97 on USD strength. Brent Crude suffering a bit more, now well off 1-month highs of $105.5 to trade $103. Having moved last week on growth concerns, USD strength now hindering it further.

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

• Japan               Money Stock                           Better
• Aussie              Home Loans                            Better
• Aussie              NAB Business Conditions        Better
• Aussie              NAB Business Confidence       Better
• China               Industrial Production             Worse
• China               Fixed Asset Investment           Worse
• China               Retail Sales                             In-line
• See Live Macro calendar for all details

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

• Lloyds Chairman Bischoff to step down
• Glencore Xstrata to scrap plans for Australia coal export terminal
• Elan agrees $1 bln royalty deal with Theravance
• Centrica sees earnings in line with expectations
• UNITE trading in line with expectations
• Interserve trading in line with 2013 guidance
• Diploma H1 pretax profit rises
• Afferro Mining – confirms IMIC have raised funds for bid
• Johnston Press revenues down 11 percent
• Glencore copper output up 18 pct, trading performs “in line”
• Lonmin lifts production outlook after solid first half
• Dignity says Q1 ahead of expectations
• Ashtead buys Accession Group for 28 mln stg
• ITV buys controlling stake in High Noon Entertainment
• Rank says Q3 revenue impacted by cold weather
• Flybe in talks over possible sale of Gatwick slots
• Premier Oil says Matang confirmed as important discovery