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

UK 100 called to open +20pts, after positive sessions from the US and Asia as investors await the publication of September US Non-Farm payroll (NFP) additions as well as an update on the nation’s unemployment rate. Optimism after US jobless data came in slightly below forecasts (although not without the traditional upward revision to the prior week) and US monthly Factory Orders were not as weak as expected (still -5%, but often volatile). Could NFP be the catalyst for the next leg up?

Markets also buoyed by European Central Bank (ECB) President Draghi’s press conference confirming he was ready to deploy the help offered to intervene in sovereign bond markets to reduce borrowing costs and put the ball firmly back in the court of the governments which some took as a gentle nudge, especially with Spain continuing to hold off. Then again, ECB victim of own pledge’s success, with Spain’s borrowing costs already back to manageable/sustainable levels (see Madrid’s sale of medium term debt at ‘OK’ yields and with decent demand yesterday).

After the European close, the main event was the publication of the US Federal Reserve’s (Fed) minutes from its latest Open Market Committee (FOMC) which highlighted major downside risks to the US economy and labour markets (key metric now) remaining weak. Those looking for clues about more policy easing would have been disappointed, however, with serious concerns about the impact of more intervention on the end-game of stimulus withdrawal. Is that it? QE3 all we’re getting?

Spain’s Economy Minister De Guindos maintained Spain does not require a bailout during a speech in London (does he really have time for that?), while the Greek PM Samaras says he will ask the ECB for better terms on his holdings of Greek debt, all the while concerns grow that the country’s bailout programme is slipping with a continued standoff with the lending troika (EC, ECB, IMF).

Overnight, Asian optimism on US tempered by the Bank of Japan (BoJ) leaving rates and asset purchases (quantitative easing – QE) unchanged (like the Bank of England [BoE] yesterday), and the published statement sounding a little more dovish than previously, cutting its growth expectations for the second month on the trot. Adding to the concerns over a slowing China, those calls for more stimulus are only going to grow.

In FX and Commodities, the USD’s weakening versus GBP and EUR ahead of the FOMC meeting helped Gold back above February highs of $1791/oz and closer to last November highs $1800/oz. Gains tempered thereafter by suggestions of nor more intervention (see above). GBP/EUR off its lows on hopes that Europe closer seeing Spain request for aid.

Oil prices (US Light and Brent) have continued their rebound from recent lows (back to end-Sept/beginning-Oct highs) after the escalation of tensions between Syria and Turkey, adding to the existing unrest in the Middle East.

Today’s focus will be on German Factory Orders which are seen week again in August, a worry for the region given the nation’s importance for any recovery/escape from recession. Thereafter, it’s the big one – US Non-Farm Payrolls (NFP), one of the most watched pieces of macro data and even more so now that the US Fed has linked the longevity of its Quantitative Easing (QE3) programme to be dependent on improvement to unemployment.

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

• Aussie              Construction Perf Index          Declined
• Japan               Interest Rates                          Unchanged
• Japan               Leading Indices                       In-Line
• See Live Macro calendar for all details

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

• Johm Wood Group says confident on meeting FY expectations
• Earthport says CFO stepping down
• Smiths Group in $400m bond offering
• Telecom Plus sees profits ‘firmly ahead’ of last year
• Kcom says performed in line with expectations during first-half
• Grainger announces Hampshire deal with Bloor homes