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

UK 100 called to open +10pts, after US Federal Reserve (Fed) Chairman Bernanke didn’t deliver quite as dovish a tone to his FOMC (Federal Open Market Committee) statement, deferring additional monetary stimulus measures and not extending low interest rates by another year to 2015 – two elements markets had been hoping for to help the flagging US economy.

US markets traded down, but recovered after analysis of the phrase “we will provide additional accommodation as needed”, which was an upgrade from the prior “we are prepared to take further action as appropriate”. It now looks like we have to wait until next month (same situation for last few months). Asian trading overnight has had an air of disappointment with the lack of Fed action.

This puts the ball back European Central Bank (ECB) President Draghi’s court who talks this afternoon, and expectations are running even higher that he will talk of new/enhanced measures (a bazooka) to deal with the disparity between core and peripheral sovereign bond yields (borrowing costs). He has said he will do whatever is necessary. Now he has to put his measures where his mouth is. Some are suggesting we are destined to be disappointed.

Looking at UK 100 index futures overnight, little ground made beyond 5,700. With markets potentially in even more of a wait-and-see mode today, post-Bernanke and pre-Draghi, headway may be limited, although UK PMI Construction, Eurozone PPI and the Bank of England (BoE) UK rates/Quantitative easing (QE) decision could be catalysts for either a move beyond or fall back.

Other news of note overnight was the IMF saying there are serious question about the economic future of the US due to the fiscal cliff leave policy as is (tax increases and spending cuts which weigh on growth, or cancel then and add to national debt burden). Greece has agreed to another €11.5bn of spending cuts. S&P downgraded Cyprus to BB from BB+ but affirmed Germany at AAA Stable. Moody’s said outlook on Greek banking sector remains negative with risk of country’s eurozone exit.

Looking at FX and Commodities, Gold off its highs as the USD strengthened versus the majors GBP and EUR, on the prospect of no stimulus for another month (if Fed doesn’t print more money to buy bonds to reduce borrowing costs, there is no increase in money supply and so no devaluation of the currency). Oils off their post-Bernanke lows.

Today’s focus likely on ECB with macro data playing second fiddle. Although the afternoon may return to look at US data for more signs that Fed stimulus may be delivered next month (déjà vu).

Results out this morning from French investment bank BNP Paribas (yesterday peer Société Générale disappointed). For a run-down of any other results out this morning (Adidas, RSA Insurance and Schroders), speak to your trader.

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

• Aussie              Trade Balance                         Better
• Aussie              Retail Sales                             Better
• See Live Macro calendar for all details

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

• Ladbrokes to focus on digital strategy in H2
• Smith & Nephew boosts dividend as confidence grows
• Olympics power provider Aggreko outperforms in H1
• UK rain boosts foreign bookings at Thomas Cook
• Schroders posts strong H1 inflows, profits down
• Insurer RSA’s profit down on floods, quakes
• BAE Systems profit down as Saudi deal drags
• Cobham to supply U.S. air force tanker programme
• BSkyB welcomes CC’s all-clear on Pay-TV
• Trinity Mirror sees year ahead of expectations

Morning Press Selection:

• Asia pressured as Fed offers no stimulus – FT.com – Markets http://on.ft.com/MWLGRE
• Fed hints at fresh action on economy – FT.com – US Politics & Policy http://on.ft.com/Qfogdh
• Bundesbank urges ECB to keep within remit – FT.com – EU Economy http://on.ft.com/R8wJQX
• Nationalising RBS on the table – FT.com – UK Politics & Policy http://on.ft.com/MZFQ40
• Global slowdown bites across Asia – FT.com – Asia-Pacific http://on.ft.com/Mievvy
• Brace for an era of crisis aftershocks – FT.com – Markets http://on.ft.com/MiGBqE