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

UK 100 called to open -20pts, again, after US markets closed very slight lower, essentially flat since Friday’s close. It was a similar picture across Europe and in Asia overnight (but China still very weak), with continued consolidation/profit/breather-taking following the US Federal Reserve’s (Fed) monetary stimulus (QE3) announcement last Thursday and the European Central Bank’s (ECB) outlining of its sovereign bond market intervention (both of which markets had been rallying on/pricing in for a good while).

With all eyes now on the US inflationary effects of QE3, moves in the oil markets (beneficiary sector on perceived demand improvement) were a big focus last night. The price of US Light Crude and Brent spiked lower by around $4 with explanatory suggestions ranging from rumours of a release of US Strategic Petroleum reserves (SPR) through to an erroneous fat finger trade given the lack of news flow (bar the poor Empire State Manufacturing figure which would, if anything, support continued QE, and thus a weaker dollar and higher oil price).

Overnight in Asia, markets remain cautious given the delicate political situation regarding an island dispute between Japan and China. There is press talk of China launching sanctions of Japan fails to concede. For China bears note that mining giant Rio Tinto’s CEO has said, that while there is no quick fix for China, estimates on its slowing growth may have been overstated and long term prospects remain good with the ‘iron ore market possibly picking up now’ after its shock collapse. A rare bull in the china shop?

Overnight, macro data shows another month of slight rises for Chinese property prices, although year-on-year growth still well in the negative. Existing stimulus working its magic? We’re still waiting for an update on Foreign Direct Investment (FDI) in China, which has potential to provide further evidence of outsiders shunning the slowing powerhouse, reinforcing calls for stimulus. Back to Europe and EU Car registrations show a slump from July’s already weak figures as growth is hampered by the sovereign debt crisis and knock-on austerity. German manufacturer Volkswagen one of the only bright spots.

Today, watch out for UK inflation figures which are seen cooling a touch year-on-year in August, but remaining above the key 2.0% level (CPI) and a world away from the negative economic GDP growth the nation is posting. Later, ZEW surveys on Current and Economic sentiment in Germany and Eurozone are seen remaining depressed,. Although may post an uptick. In the afternoon, US housing seen flat/slightly higher. Away from macro data, be aware that Spain and Greece and the existing bailout fund EFSF are selling short-term paper.

In Commodities, the yellow metal Gold is now well off its highs following Bernanke’s dollar-weakening inflation-boosting announcement. Now trading around $1755, off highs of 1775, September rising support sits around $1740. It’s a very similar technical situation with its cousin Silver. In Oil (discussed above) the sell-off yesterday in US Light Crude and Brent has not corrected and both are trading back around pre-QE3 levels. Good news for those scared by input cost inflation, but geo-political/supply issues still in play.

In the FX arena, GBP/USD trading flat around 1.62 following last week’s QE3-induced dollar weakening and resulting rally. In EUR/USD, however, the pair has begun to correct back with below 1.31 after hitting 4-month highs. Whether this is a result of USD strengthening or EUR weakness is difficult to identify but, Eurozone uncertainty more likely with Spain having to act before Draghi’s backstop activated.

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

• China               Property Prices                       Another month of slight growth
• EU                    Car Registrations                    Slumps even more than July
• See Live Macro calendar for all details

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

• Debenhams to make year profit forecasts
• Galliford Try FY pretax profit up 80 pct to 63.1 mln stg
• Stellar Diamonds finds high diamond grade from Katcha Dyke
• JD Sports H1 profit hit by losses in Blacks
• Volex warns on FY profit, to cut costs
• Faroe Petroleum swings to H1 profit on rising output
• Kentz awarded $50 mln contract by Exxon Neftegas
• Condor Gold encouraged by grades at La India project
• Oxus Gold Filed Claim Relating to Uzbekistan Arbitration Proceedings
• Serica Energy JX Nippon to farm-in to Serica’s 22/19c block