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

UK 100 called to open +10pts, after a choppy and mixed session by US markets but a positive move by Asian market overnight. Hope are still abound that the world’s major central banks will step in with action to give the global economy a kick up the behind. After bouncing from near  1-month lows, could this help with a retracement of the ground lost since 20 July?

US markets closed mixed after Eagan Jones (a ratings agency which is gaining influence) downgraded Italy by 3 notches with the risk that a Spanish collapse spills over dangerously from Madrid to Italy’s banks which could not be supported by the state (just like Spain. Bond markets already presuming this given the latter’s implied and unsustainable borrowing costs.

This offset some positive bias which had come from more hopes of monetary stimulus (QE, money printing) fuelled by poor US housing data, and quality Q2 results from the likes of Caterpillar and Boeing making up for Apple’s prior day miss, and an ECB official calling for Europe’s new bailout fund to be granted a banking license to borrowing money from the European Central Bank (ECB) to lend to banks, sovereigns to avoid a Eurozone collapse.

Overnight in Asia, concerns over China’s slowing economy still keeping a lid on things. Moody’s kept up its momentum by downgrading its outlook on German banks as a follow up to its recent action on the sovereign. Is Germany still the backbone of the region? For how long?

With mostly negative news, it must be presumed that the positive bias for European markets’ opening calls comes from the recent perversion of bad news hopefully driving central banks to act. This would come from them printing more money to buy bonds, to bring down yields and thus borrowing  costs to allow banks to lend more cheaply and for us to borrow and spend. Bad news can thus be good news.

UK GDP was a shocker yesterday. That could help convince the Bank of England (BoE) to act. The US publishes GDP revisions today, if that’s shows worse recession than thought, the US Federal Reserve (Fed) may have its hand forced. The ECB is being coaxed to act to save Europe as austerity results in growth collapsing.

Hopes of more QE seen the price of Gold (edge for inflation, cheaper to buy of US prints more dollars) regain the $1,600 level, not seen since early July.

Focus today likely on US Durable Goods Orders, Unemployment and Housing data which may influence hopes/fears of more/less QE by the Fed. Italy also selling short term debt (likely very expensive on account of Spanish woes and contagion fears.) US Corporate results from amongst others, United Tech, Dow Chemicals, Exxon Mobil, Sprint Nextel, Colgate Palmolive, Amazon, Expedia, and 3M.

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

• None.
• Barrage of UK corporate results this morning
• Speak to your broker about who beat and who missed
• See Live Macro calendar for all details

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

• Bodycote posts higher profit for first half
• Capital Shopping Centres rents fall as shops go bust
• Rolls  Royce profit up on fuel – efficient jet demand
• Travis Perkins profit held back by rain disruption
• Shell Q2 profits down
• Tate & Lyle says profit in line despite Europe weakness
• Compass full year view unchanged
• Faroe Petroleum says lending facility doubles
• AstraZeneca sales hit hard by generic competition
• Unilever’s growth helps it avoid pitfalls of rivals
• Synergy Health says Q1 trade in line with expectations
• Laird says H1 profit rises 7 pct
• BSkyB announces buyback on record profits
• Lloyds sets aside £700m more for mis–selling
• BG Group Q2 earnings down 4 pct, raises dividend
• Lonmin cuts spending plans for 2012, beyond
• De La Rue says year expectations unchanged
• National Express profit falls on weaker UK rail, coach ops
• Centrica’s H1 earnings up, sees more growth

Morning Press Selection:

• UK data raise fears for triple A status – FT.com – Front page http://on.ft.com/M8J4DW
• Barroso to push Athens on reforms – FT.com – Front page http://on.ft.com/MYiKHz
• Italy stands firm in face of markets crisis – FT.com – Front page http://on.ft.com/MmrSWQ
• Free ECB’s hand to aid states, says minister – FT.com – Front page http://on.ft.com/NKjamZ
• Fed braces for revisions to US GDP – FT.com – Front page http://on.ft.com/MHf9Tn
• A cure for the eurozone’s Lehman syndrome – FT.com – Front page http://on.ft.com/P0ERwm
• Whys, damn whys and statistics – FT.com – Front page http://on.ft.com/OiJmGl
• Northern neighbours must heed Monti’s warning – FT.com – Front page http://on.ft.com/NYPlOa
• Europe needs a bigger crisis firewall – FT.com – Markets http://on.ft.com/OC0DGO