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

UK 100 called to open +35pts this morning at 6565 with Asian markets taking the baton from a positive finish in the US after geopolitical tensions eased thanks to Russia’s proposal of a Syrian surrender of weapons to avoid US intervention, something generated by comments from US Secretary of State John Kerry on a potential diplomatic solution leading Obama to make a quick change of tack and putting on hold anything military.

Asia also benefiting from reduced fears on tapering (see below) and growth, with China data beating expectations, showing improvement in August putting at ease those worried about the world’s #2 economy. Japan still benefiting from Olympics bid win, and despite BoJ minutes showing calls for sales tax hike and continued reforms.

Ahead of the Fed meeting next week, when tapering of QE3 could be announced, and at a time when every Fed member’s comments are analysed, the San Francisco President said he is keeping an open mind, and that any reduction in stimulus would be gradual, in several stages and no rate hike until late 2015.

In focus today, we have another limited data slate with France updating on industrial and manufacturing production, with rebounds expected. US small business optimism seen ticking up adding to US recovery and tapering fears, while Job openings may be looked to for more clues on the key and yet confusing US labour market.

Looking at the UK 100 chart, we’re back at the ceiling of the rising channel since 22 Aug when the Syria situation emerged. 3-month graph shows resistance possible around 6575, mid-August highs 6620, then early August highs 6715, however, as always we look to the longer term chart which shows the falling resistance from May we mentioned yesterday which could be a hurdle at 6630.

In FX, USD index fallen below 82 on reduced demand for the reserve currency and safehaven of choice as Syrian tensions ease with major peers benefiting. GBP/USD bounce continues with 1.57 highs of August revisited. Note resistance in Jun and Aug at 61.8% Fibonacci retrace of 2013 Jan-Mar decline. EUR/USD regained 1.325 which could become support and serve as platform for recovery to 1.345 highs of August.

Gold under pressure for third day, held below $1400 but back at trendline of rising support from end June. Safehaven demand eased on reduced geopolitical tensions surrounding Syria. Potential support around $1370, then $1350. Peer Silver wrestling with falling resistance at $24.

Oil remains under pressure after potentially positive developments on Syria and possibility of US releasing strategic reserves with US light Crude back down around $108.5 near 3-week rising support at $108 having hit highs of $110.7 on Friday. Peer Brent Crude bounced  off $112.5, just short of 2-Sept low, but still well off highs of $116.5.

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