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

  UK 100 called to open -15pts at 6755, after Asia-Pacific followed US counterparts lower following the US Federal Reserve delivering a less dovish FOMC message than expected and, as we thought it might, in an effort to calm overextended markets, allude a tapering of QE3 earlier than markets have been pricing in (Dec/Jan vs. March).

 QE3 reduction remains data dependent but the absence of comments about financial conditions implies this now being less of a worry. There was little dwelling on the government shutdown suggesting potentially more of a hindrance in terms of data provision than economic impact, although we doubt it. Housing weaker though.

 We still believe in no tapering until Q2 2014. The Fed may do too. But as we have stated for a long time, the FOMC is playing a game of expectations management, providing sufficient accommodative signals all the while trying avoid markets getting too complacent and running into bubble territory, ultimately bursting and needing more help to repair. Sorry guys, but we are still on on US data-watch, all data being important.

Overnight data saw UK Consumer Confidence pull back a bit, while things were rosier in Asia/Pacific with Aussie building approvals and Japanese Housing/Construction soaring. In Europe this morning, however, disappointment from Germany with Retail Sales, Import Prices and Consumer Confidence all missing expectations. UK House Prices continue to climb, however, faster than expectations. How long before such good data becomes bad?

 The BoJ left its hugely accommodative monetary policy on hold, and signs of it working seen in macro data. An ECB statement says it is making liquidity swap arrangements with global central banks permanent, turning the crisis facilities into backstops to guarantee stability while Nowotny said more cheap loans (LTRO) when existing ones expire.

 Facebook results beat expectations, shares +14% after hours, but suggestions of less market share amongst young teens may be something else that works in Twitter’s favour ahead of its IPO next week and saw Facebook  shares -3%  later. Royal Dutch Shell this morning looks to have missed expectations, at odds with the BP beat earlier in the week. Antofagasta’s production reports says on-line for FY output. BT beat consensus too.

 In focus today aside the Fed FOMC digestion we have Eurozone unemployment and inflation, US jobless claims and Chicago PMI. Note also it is month and week-end and after the big event of the Fed things could be quiet again on account of the risk off mood in US and Asia. Some big name US corps reporting Q3 results this afternoon too (see calendar).

 The UK 100 has fallen back from its foray above 6800 and test of rising resistance, with the waning momentum we had pointed to recently coming to a head thanks to the Fed’s less dovish words. Rising intersecting trendline still available as support at 6720.

 In FX, USD basket rallied to near 80 on Fed statement. GBP/USD holding back down near 1.60 on USD strength. EUR/USD fallen back below 1.37 on USD strength and dovish ECB statement.

Gold weaker after Fed statement helped USD rally. Down from falling resistance at 1360 to $1335 level which is 50% Fibonacci retrace of May-June $1490-$1250 decline. Falling highs from March still dominate. Downside still possible. In Oils, US Crude weakened to $96.5 on US inventory build although Brent maintains upward trend even if off best levels of $110

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