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

UK 100 called to open -10pts at 6610, with Asian markets in the red after Australia’s RBA rate cut to a record low 2.5% and remained dovish as well as concerns that stronger US growth data implies the Fed will soon be in a position to scale back its QE3 stimulus programme. Asia also impacted by HSBC’s H1 results disappointment weighing on both on Hong Kong and Shanghai bourses.

Japan bucking the trend on an combination of US growth optimism and taper expectations supporting the USD and the weaker JPY helping Nikkei exporters and an element of index recovery after yesterday’s weakness. Note the IMF has warned of Japan’s debt risk saying more monetary easing could backfire.

US markets closed mixed-to-lower despite strong US macro-economic data and more on QE3 sentiment with the Fed’s Fisher at odds with Bullard’s Friday comments, saying Fed should taper in September, in-line with the Goldman Sachs house call, unless data collapses.

In Europe sentiment still buoyed by positive PMI readings across the region, but most notably in the UK where the key and dominant services sector posted remarkable growth yesterday, supporting the theory of the economy approaching ‘escape velocity’

Overnight data included better UK BRC Sales which accelerated in July, likely helped by good weather. The Aussie Trade balance was lower than expected in June, with a downward revision to May, however, House Prices rose for third consecutive quarter, even accelerating, supporting recovery, helped by low rates. Japanese sentiment mixed, but down in June.

In focus today will be the last of the manor banks to report with Standard Chartered updating on H1 results. UK Industrial & Manufacturing Production growth in June is seen improving in both segments, adding to the weight of the positive UK data of late, especially GDP even if our services oriented economy (77% of GDP) means Production only accounts for 15%.

Other data includes German Factory orders which are also seen rebounding in June after a weak May. The US Trade Deficit is seen impacting slightly, while the NIESR’s UK GDP Estimate will be of interest in terms of whether it sees further acceleration and US Economic Optimism is seen ticking up only slightly.

UK 100 back from foray >6660 to test 6700, and back around the 6600 level. Potential support from end-July rising lows at 6590. Support here bodes well for continuation of long-term uptrend, but so would a bounce from end-July lows of 6540-60; further weakness could materialise without jeopardising uptrend. Consolidation could continue in August. Positive macro data spooking US stimulus addicts, but bullish bias offsetting weakness (only 1.9% off last Thursday’s summer highs).

In FX, GBP/USD bounced from 1.51 to 1.538 on but found resistance ahead of end-July highs of 1.54. GBP stronger on forward guidance versus more QE. USD held back the pair on strong data implying end to QE3 in sight. EUR/USD also bounced but found a hurdle at 1.33. Support possible 1.32. USD/JPY found support around 98. USD Basket (vs. majors) also holding up around 81.8.

In Commodities, Gold back below $1300 again, testing the expected support level again and opening up the chance that he fall from the rising channel from end-Jun cold see the long term downtrend (from Oct 2012) resume. Downside to end-June and near 3yr lows of $1180? Fundamental support arguments still lacking.

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

• UK            BRC Sales                            Beat
• Aussie      Trade Balance                    Missed
• Aussie      House Price Index               Beat
• Aussie      RBS rate decision                Cut, as expected
• Japan       Leading Indices                   Mixed

See Live Macro calendar for all details

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

• 888 plans own brand poker, casino in New Jersey
• Pendragon underlying profit rises 24%
• Meggitt profit beats forecasts on civil aero growth
• Esure H1 profit before tax up 15.2% to £56.9m
• Rotork reports higher profit, confident of further progress for the year
• BBA Aviation first-half revenue rises 2%
• IHG to return $350m as first half profit rises
• Greggs warns on profit as sales melt in heatwave
• Fresnillo H1 profit drops 29%, slashes dividend
• Legal & General first half profit before tax up 13%
• Standard Chartered will release its 2013 Half Year results at 9.15am (GMT)
• EasyJet July passenger traffic up 2%
• SDL posts first-half pretax loss