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

UK 100 called to open +30pts at 6270, holding above the key 6220 Mar/Apr resistance-turned-support level as we return from the long weekend. This maintains the intersecting support from Jan lows which means potential for the rally to resume and for 2016 highs of 6430 to be revisited. Bears watching for any weakness back close to 6200. Watch levels unchanged: Bullish 6295, Bearish 6255.

The positive opening call comes after a US close to the upside boosted by Amazon and banks and despite a mixed Asian session with Chinese manufacturing data confounding, corporate profits contraction (UBS, HSBC) reminding us of global economic headwinds and Australia surprising with an RBA rate rate cut to fight disinflation. The latter will surely only go to fuel fears of another round of ‘currency wars’ as nations fight for that competitive edge via currency weakness.

Australia’s ASX outperforming thanks to that surprise rate cut sending the AUD lower to the benefit of equities. A weak USD and a strong read for Building Approvals is also helping. After a poor start to the week yesterday, with the Yen staying strong, note that Japan is closed of the rest of the week (Golden Week). Chinese equities supported by Sunday’s official PMI Manufacturing holding above breakeven, even if this morning’s Caixin read is at odds and suggests a worsening of contraction.

US bourses closed higher yesterday in somewhat of a recovery from last week’s tech-led sell off, with the financial and consumer discretionary sectors keeping the markets’ head above water. This all despite a bit of lacklustre macro data – which was not quite lacklustre enough to dent equity market sentiment significantly.

The data did, however, help weaken the USD to 15.5-month lows which, while a good thing for US exporters, also keeps Gold in its uptrend from its late 2015 lows and saw the yellow metal breach $1300 an ounce yesterday – a level not seen since 19 Jan 2015. With Gold now having broken above a 3-year falling resistance, there’s potentially more in store as long as the Fed doesn’t hike rates again soon!

Brent and WTI are up off their worst levels this morning following a broad sell off over the weekend (Brent finding support at the floor of a 2-week rising channel). Profit taking the likely culprit given that oil prices are now approaching the mythical level at which fracking becomes a viable competitor – of course it’s not clear whether or not any shale drillers are still operational. Note a weak USD should keep things supported around current levels.

In focus today will be UK PMI Manufacturing seen inching further into growth territory while Eurozone PPI may have made it back to breakeven which might put ECB President Mario Draghi slightly more at ease. Thereafter watch out for US data his afternoon with US ISM New York and Economic Optimism and the Fed’s Mester and Williams for updates on stateside monetary policy opinion.

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

• Aviva buys an extra 23 pct stake in India JV
• Fresnillo says confident that will see a turnaround in 2016
• Centamin says Q1 pretax profit rises 43 pct
• Lamprell says search for new CEO continues
• Interserve, Doosan jv wins 46 mln stg Northumbrian Water contract
• Joules Group announces its intention to float on AIM
• Regulator clears Severn Trent and United Utilities JV
• Just Eat raises full year sales and earnings guidance
• HSBC Q1 profit falls 14 pct on weak trading, but beats expectations
• HSBC  Q1 reported profit before tax was $6.11 billion
• Oil prices rise as dollar slips to 18 – month low against yen