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

UK 100 called to open -10pts at 6575, (but ex-divs taking off 14pts so index essentially flat), with Asian markets in the red again, following on from weak European and US sessions as tapering fears gather pace anew with Fed members Evans and Lockhart both raising the possibility of September although the former did say that he ‘couldn’t be sure which month’ and a narrower US trade deficit. The BoJ announced no new easing measures, seeing the JPY hit a 6-week high vs. USD and Japan’s Nikkei fall below 14000.

In Europe sentiment held back by scepticism from the EU’s Rehn who said too early to draw conclusions on economy despite raft of positive data of late, in contrast with the IMF upping its estimate for German growth, and on the back of continued mixed corporate results.

Overnight data very Australia focused with an improvement in Construction and Home Loans although investment lending deteriorated as did Swiss Consumer confidence this morning.

In focus today will the Bank of England’s (BoE) quarterly inflation report, less for the data within, although cooling inflation and better growth recently may see some surprises on outlook, but more for the accompanying information and statement from the new governor Carney regarding the central banks’ move to forward guidance on interest rates rather than more QE.

The UK Lloyds Employment Confidence will be looked to given the improved UK jobs situation (although zero hours flattering unemployment rate and providing employer flexibility but not helping wages generating much debate) and given the supposed narrowing in the UK output gap. After the positive Eurozone PMI data of late and much better than expected German Factory Orders, investors may be looking for German Industrial Production top surprise to the upside too.

Results out this morning show Randgold Resources (RRS) looks to have missed at the bottom line while gold output also missed, and actually fell. Old Mutual (OML) shows adjusted operating profit +14% with AUM +9%. Tui Travel (TT.) profits +10% on revenues +5%.

The UK 100 pullback from the 6700 visit continues, and we’re right back in the middle of the July range 6530-6660. September QE3 taper fears and economic growth scepticism trumping the solid macro data of late. After rising lows from end-July tested, watch for late July lows of 6530 to hold and to keep long-term uptrend alive, via continued sideways move and consolidation in August. If sentiment remains under pressure, downside to 6480 still a possibility.

In FX, GBP/USD sideways around 1.535 as GBOP and USD compete on forward guidance/no more QE vs. QE3 tapering expectations. EUR/USD up near recent highs of 1.33 on improved EZ data of late and despite the US taper fears. USD/JPY touching 97. USD Basket (vs. majors) still holding 81.6 not benefiting from taper talk as equities suffer.

In Commodities, Gold maintains its new leg down having failed to hold $1300. Fall from rising channel opens up possibility of a revisit of recent and near 3yr lows of $1180. Fundamental support arguments lacking as ever. Copper also down as base metals weak on reduced Fed stimulus fears.

In Oil, both US Light Crude and Brent Crude both still under pressure on account of growth scepticism both from recent data and from opinion that tapering would be too early and put growth recovery in doubt. Supply/demand concerns also an issue with US shale boom. US Light Crude testing $105 (middle of 1-month $102.5-109 range). Brent back below $108 although with support $107.5, also in middle of 1-month $105.5-110 range.

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

• Aussie      AIG Construction                             Improved
• Aussie      Home Loans                                    Beat, Improved
• Aussie      Investment Lending                        Deteriorated
• Switz        SECO Consumer Confidence          Missed, deteriorated

See Live Macro calendar for all details

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

• Lancashire Holdings to buy Cathedral Capital Ltd
• Grainger says in strong position after paying down debt
• Glencore, JPM sued in U.S. as warehousing legal battle ramps up
• Ferrexpo profit flat as higher production offsets lower prices
• Quintain Estates says well placed for London developments
• Kier says London’s fire station project to go ahead
• United Drug sees full-year adjusted EPS growth of 5-8 pct
• TUI Travel eyes 10 pct full-year profit growth after strong Q3
• Randgold Q2 profit hit by gold price plunge
• ENRC Q2 production ticks higher, iron ore jumps
• Old Mutual operating profit rises on robust cash flows
• StanChart, struggling in S. Korea, may sell consumer finance units