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

UK 100 called to open +15pts, with Asian markets mixed – Japan posted good gains, but Australia, Hong Kong and China were lower. Australian equities lower despite much better than expected unemployment figures, with the headline rate falling to 5.2% compared to an expected rise from 5.4% to 5.5%, although the AUD did post gains.

South Korea added to regional weakness after Q3 showed the economy growing at the slowest in 3 years, and the BoK cut growth forecasts. This adds weight to the slowing Japan and China, and adds to global slowing woes.

While Japan may continue to be buoyed by the prospect of policy easing after the mid-month election and likely change of power, stateside the political fiscal cliff stalemate/tennis continues to offer a sideshow with 25 days until D-day and tax increases the major hurdle.

Certain Republicans may have softened their tax increase stance, but Treasury secretary Geithner suggested the Democrats are prepared to fall off the cliff if the other party fails to agree. Obama still spouting optimism of ‘deal in a weak’ is the others give ground.

US markets held back by technology, notably Apple (-6%) on reports of margin hikes and news that the company was losing tablet market share. News that Deutsche Bank may have avoided/hid major loses during the crisis may also bring sector-risk and balance sheet transparency back to the fore.

Macro data this morning is confined to unemployment, with France posting a better than expected rate although it did deteriorate from the prior month. In Switzerland, the rate also worsened, although by no more than was expected.

After George Osborne’s Autumn statement/budget, Fitch says it confirms the scale of the fiscal challenge and warns that missing the debt target weakens credibility of its fiscal efforts which is one of the few things supporting its AAA rating.

Other news overnight included S&P lowering Greece’s long-term debt rating to selective default, although this is purely in light of the upcoming debt buyback, and it should regain its CCC rating if the buyback is successful.

Today’s main events will be the rate decisions by the BoE and ECB, with both expected to leave rates unchanged and the BoE to maintain its asset purchase target (QE) too. Nonetheless, the ECB press conference is expected to have Mario Draghi revise down its economic growth forecasts following the run of poor data from the region as austerity bites and global growth slows.

Other data of note today includes the Eurozone GDP (before ECB press conference) is expected unchanged at -0.1% QoQ and -0.6% YoY. This will be followed up by an expected rebound in German Factory Orders. In the afternoon, US Challenger job cuts and Jobless Claims will be watched ahead of tomorrow’s Non-Farm Payrolls numbers.

Yesterday’s better PMI data from Europe and Germany saw the UK’s flagship index test above recent resistance (5905), although long-term resistance via 18-moth falling highs (5915) remains unbroken. Support still at 5860.

In FX, the GBP/USD has fallen back from recent highs and below 2-day lows of 1.608. Support possible at 1.6065. This appears more a function of GBP weakness than USD strength with the Chancellor’s Autumn pushing debt targets out yet further. EUR/USD also off its highs of 1.315, falling back below 1.305 overnight.

In commodities, Gold has weakened back again below $1700 and $1695 again on the stronger USD, opening up the possibility of a retest of $1685, and potentially even the early November and 3-month lows of $1670. The Oils (US Light Crude and Brent Crude) also weak on stronger USD and global growth worries, although support may be near for Brent Crude at $108.5 and US Light Crude around $87.5.

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

• Aussie              Unemployment                       Better
• France             Unemployment                       Worse
• Switz                Unemployment                       In-line
• See Live Macro calendar for all details

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

• Mulberry sees improvements after first-half profit fall
• Cineworld places 4.5 pct of co
• Falkland Oil plugs last 2012 well
• Mediterranean Oil gets Malta licence extension
• Premier Oil says Cyclone well in N.Sea does not find oil
• Rolls-Royce in talks with SFO over bribery concerns
• DS Smith first-half pretax profit rises
• PZ Cussons says overall H1 performance in-line with expectations
• EasyJet carried 7.7 pct more passengers in November
• Micro Focus Intl core earnings up, prospects improve
• Premier Farnell Q3 adj pretax profit falls 18 pct