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

UK 100 called to -5pts, with futures having recovered from their worst levels following the European Central Bank (ECB) President’s statement and press conference, and having traded around this level since the US market close last night.

This still doesn’t hide the fact that markets performed a 180 degree turn when Mario Draghi opened his mouth (UK index went from +40 to -60pts in the blink of an eye), with market disappointment that he failed to launch specific new/enhanced measures to tame sovereign bond markets, following what is now considered a tease-speech last week (“…I will do whatever it takes to preserve the euro.”. Then again, wasn’t everyone saying we were destined to be disappointed by another political promise?

Nonetheless, given the stability of overnight trading (despite it being August and thus quiet thin-volume holiday season), it suggests the negative reaction of yesterday may have been overdone. He didn’t announce the launch of anything now, but he said he would consider several options if countries (Spain and Italy) formally asked for help and succumbed to strict bailout-like supervision. He does look to have several good ideas and has addressed a few market concerns regarding the ECB and it seniority and preferential status and working alongside the existing and new bailout funds. This may be what returns optimism.

Analysis has been rife and, like when he announced Long Term Refinancing Operations (LTRO), the positive reaction may be delayed. Hence my optimism given the flat-line trading overnight and not overly-negative performance by Asia-Pacific equities. With the US Federal Reserve (Fed), the ECB and the Bank of England (BoE) having done nothing and disappointed markets we’ll have to wait at least another month for action. That’s unless the People’s Bank of China (PBOC) decides to help out with rate cut or other stimulus which risk-assets would surely appreciate. It has a knack of popping up when least expected.

Other news of note overnight was China reporting more mixed macro data with official Non-Manufacturing PMI deteriorating and HSBC’s figure improving. Ratings agency Moody’s has downgraded Slovenia on banking system worries. Spain has also confirmed that it will request financial assistance for some of its banks in the next few days.

Looking at FX and Commodities, such as Gold, Silver and Crude Oil have traded lower on account of the safehaven USD being favoured over the EUR (grazie Draghi) and commodities being more expensive for those needing to convert their home currency into USD.

Today’s focus likely on US Non-Farm Payrolls (NFP) as it is the most widely followed piece of macro data giving an idea of how the most important economy in the world (for now) is doing in terms of employment. A blowout NFP number could easily see markets forget the Draghi disappointment for an afternoon/weekend. Ahead of that, an update on the state of the Eurozone Services industry and Retail Sales growth in the region.

Results also out this morning from UK taxpayer owned Royal Bank of Scotland (RBS). At first glance it looks like the group loss is a more than analyst consensus was expecting. However, as with all banks, the devil is in the details regarding guidance, disposals etc. Potential for it and its peers shares to be volatile. For a full run-down of the details speak to your trader.

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

• Aussie              AIG Perf of Services Index                  Deteriorated
• China               Non-Manufacturing PMI                     Deteriorated
• China               HSBC Services PMI                              Improved
• Switz                UBS Real Estate Bubble Index                        Deteriorated
• See Live Macro calendar for all details

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

• Allergy Therapeutics says FDA clinical hold lifted
• IAG cuts full-year guidance as Iberia weighs
• ITM Power in deal with GMI Renewable Energy Group
• Costain wins 2 contracts
• RBS 2Q Net Loss £466m, says it has sacked staff after Libor probe
• Glencore to sell Viterra interest in Medicine Hat
• Xcite Energy Flow Test of 9/03b-7 Well is Progressing Well, appoints Rupert Cole CEO
• Inmarsat returns core maritime unit to growth
• Motorola extends Psion offer
• GlaxoSmithKline Completes Acquisition of Human Genome Sciences

Morning Press Selection:

• Forecaster revises down UK outlook – FT.com – UK Economy http://on.ft.com/NONnUM
• Italy and Spain coy over rescue fund aid – FT.com – Europe http://on.ft.com/QibACh
• Draghi seeks passage through minefield – FT.com – Europe http://on.ft.com/MmlX97
• Draghi’s bold move in euro chess game – FT.com – Editorial http://on.ft.com/NoLzvQ
• Now for a dose of Draghi’s monetary medicine – FT.com – Opinion http://on.ft.com/Nd4L0E
• ECB keeps ‘shock and awe’ for another day – FT.com – EU Economy http://on.ft.com/Pp5JGF
• Draghi could have a plan here – FT.com – Markets http://on.ft.com/N5RIzC
• Asian stocks fall after ECB disappointment – FT.com – Markets http://on.ft.com/MWLGRE