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

UK 100 called to open +20pts, after another set of quiet but positive sessions from the US and Asia thanks to continued speculation (like a stubborn dog, markets are really hanging on for this!) that the US Federal reserve (Fed) is creeping closer to another round of monetary stimulus. One Fed member countered his colleagues’ recent discouraging comments, saying they should not be taken as a sign the central bank is moving away from its pledge to be ready to help the economy.

Positive bias assisted by German Chancellor Merkel saying she supports European Central Bank (ECB) President Draghi’s recent pledge to do “whatever it takes” to save the eurozone and said the European Commission (EC) should have more empowers to intervene on national budgets.

With Merkel back to work there has been an easing in Eurozone crisis fears amid expectations ‘decisive’ action will be forthcoming (forgive my scepticism, but we’ve heard that more than a few times). German press suggests ECB to be given oversight over all important European banks  in a draft law to be presented on Sept 11.

Stimulus hopes also boosted by the recycling of the traditional Friday speculation that China might pull the trigger (interest rate cut, banks’ reserve rate requirement [RRR] cut) while markets are closed for weekend. The Shanghai Times suggests the People Bank of China (PBOC) is more likely to cut interest rates (credit demand positive) before it cuts the RRR (credit supply positive).

European bourses are have reached at 5-month highs, with sentiment boosted by the combined hopes of bad macro reports encouraging monetary stimulus, but also encouraging signs from some positive data prints (US housing market, UK retail Sales) which continue to leave the macro outlook very murky. Are we growing or not? Yes, no, yes no.

In the Commodities space Oil, has benefited from news that the US may dust off an old plan to release oil reserves to remove the drag of the high prices on the economy (stimulus). Brent Crude has continued its rise, hitting 116.7/barrel on supply fears, while US Crude has reached $95.5, in its uptrend, but off its highs. Gold, is back at the $1615 level on stimulus hopes.

In FX, USD stronger vs GBP after a sharp weakening yesterday on stimulus hopes. The same goes for the USD’s relationship with the EUR, with the latter benefiting from positive comments from Merkel regarding Draghi’s pledge.

Today’s focus morning will be on the Eurozone’s Current Account and Trade Balance given the struggles that the region in experiencing in terms of flailing growth but necessary austerity. Nonetheless, the Trade surplus is seen rising on €9.5bn in June.

In the afternoon, we have the preliminary reading for the Uni of Michigan Consumer confidence which is seen flat in August, this against a backdrop of mixed signals from the world’s #1 economy. US Leading indicators are expected to rebound after their negative reading in June.

As always, speak to your trader for a chat about the markets and what you like to trade.

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

• Germany         Producer Prices                       Worse
• See Live Macro calendar for all details

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

• Rank Group Raises dividend 35% on strong revenue, profit performance
• Petroceltic International Merges with Melrose
• Max Petroleum Commences drilling of BCHW-1 Well
• Pennon says performance since March in line with expectations
• Rio Tinto Prices 3-part US$3bn Bond Issue
• South West Water Well placed to beat 2010-2015 contract assumptions
• Marks & Spencer: Kate Bostock Sells 244,877 Shares/£3.56-£3.594