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

  UK 100 called to open flat at 6745 after a slightly more interesting session yesterday than might have been expected so close to year-end and after equities stateside delivered a mixed-but-breakeven performance (S&P on track for 29% gain in 2013) amid thin volumes and disappointing macro data.

 In Asia, many bourses had already closed for New Year (SK, JP) or closed early – HK in the blue, Australia in the red – meaning little positive/negate handover to the UK which is alone in being open on New Year’s eve in Europe.

 That said, China offered some bits to chew on with the PBOC reiterating it will keep appropriate liquidity, maintain prudent monetary policy and aims to keep the Yuan stable. All in the name of maintaining positive sentiment on the world’s #2 economy as growth inevitably slows, but it remains a significant contributor for the global recovery and with a recent debt audit highlighted swelling local government debt which only goes to add to the existing risks to its financial system.

 In focus today (Europe closed, UK & US close early) we have more US housing data, this time from S&P/Cash-Shiller which will be of interest following yesterday’s US Pending Home sales miss, given that it is key from a consumer confidence perspective and slowing housing is one of the worries the US Fed FOMC flagged within its tapering statement. Nonetheless, the data is for October and so may have less of an impact.

 Thereafter we have more data from the US with the Chicago PMI seen ticking back but Consumer Confidence, in light of the economic recovery, expected to post a quite considerable jump. Expectations too high?

 Bear in mind also while worries, while much reduced, still linger over China we have on Wednesday morning an update on its PMI Manufacturing which is seen falling back a touch while remaining in growth territory. This all ahead of a busy Thursday to welcome us back to the markets with UK, US & European PMI Manufacturing. France is expected to remain the odd one out remaining well below 50 and thus in contraction.

 The UK 100 actually took the break we had been expecting, correcting from its early morning highs down to prior 6720 support ahead of disappointing US November Housing and December Dallas Fed prints before recovering to near flat by the close and taking the UK flagship index sideways into the last session of the year. We expect a rather flat half-day session today with little newsflow/data to drive direction meaning the index looking likely to close +14% for the year.

 A weaker USD after poor macro data has failed to see any renewed interest in Gold which is now trading at $1200 and remaining very much in its downtrend from 11 Dec with falling highs now limiting any upside to $1210.

 The price of Oil has also given up some of its prior US inventory-drop-led gains with US Light Crude back down at $99 and Brent Crude at $111.1 suggesting more emphasis on demand for the black stuff rather that its relative pricing.

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