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

UK 100 called to open +20pts, after US markets closed just under water with a lack of macro data to drive them and despite a focus on the possibility that the European Central bank (ECB) may be about to place a cap on eurozone sovereign borrowing costs (yields) which yields for troubled nations (Spain, Italy) fall back and sentiment towards the Eurozone improve. The ECB denied the German press reports, but markets liked the idea.

Asian markets again mixed, with not much of a lead from Wall Street, but much talk of the speculation surrounding the ECB’s ‘yields caps’ and the possibility that the situation in Europe is beginning to stabilise. All eyes also on US Federal Reserve (Fed) minutes on Wednesday which may give further signs on monetary stimulus (Quantitative easing, QE) which would likely boost risk appetite.

On the monetary stimulus front, China launched a huge injection of liquidity which goes further to dampen the chances of interest rate cuts/banks reserve rate requirement (RRR) which the markets would likely prefer as a means of rebooting the Chinese economy and helping world growth via demand for things like raw materials.

In the Commodities space Gold continues to push for August highs of $1626 on monetary stimulus hopes (more signs from the Fed minutes tomorrow?). Brent Crude looks to have topped out a little despite continued supply issues and geopolitical uncertainty. US light crude has bounced back to prior day highs.

In FX, GBP/USD stronger (QE hopes rising ahead of Fed minutes). EUR/USD back at 1-week highs of 1.238  less QE hopes), but right in the middle of its 1-week range. USD/CHF fallen back to 1-week lows. USD/JPY continues to weaken after several days rallying. GBP/EUR weaker overnight, but possible rising 1-week support.

Little macro data out today, bat UK Public Finances for July, and UK CBI trends (orders and prices) for August.  Thereafter watch out for the result of Spain’s bond auction. Recent talks that the ECB could propose a cap on sovereign borrowing costs have seen peripheral yields (Spain, Italy) fall back. Spain thus likely to borrow at much improved terms. The EFSF is also issuing paper, which should see a knock on from the last point if regional members can borrow for less so should it.

Results out from Glencore (GLEN) this morning look better than expected ($1.8bn first-half profits vs. $1.6bn consensus), however, there is no news on an improvement in the share offer for Xstrata (XTA). Peer Ferrexpo (FXPO) showed profits hit by rising costs and lower commodity prices.

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)

• Japan               All Industry Activity                 In-line
• See Live Macro calendar for all details

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

• John Wood Group sees improvement at maintenance unit
• Gem Diamonds profit halves on higher costs, lower prices
• Glencore H1 profits -24%, sticks to Xstrata offer
• Lonmin says sacking striking miners could lead to more violence
• Persimmon sees lack of finance curbing demand for homes
• Ferrexpo H1 profit hit by rising costs, lower prices
• Ophir Energy confident on LNG development after Fortuna discovery
• Afren says 2012 production on track
• Barclays in talks about combining Africa ops with Absa
• Falkland Islands Holdings Trading Similar To Last Year, In Line