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

UK 100 called to open flat, with Asian markets hitting 8-month highs, having taken a positive lead from the US (helped by Apple shares bouncing) as traders prepare for today’s US Non-Farm Payrolls Employment report this afternoon. European Sentiment dented, however, by the German Bundesbank (central bank) also slashing German growth forecasts for 2013 (0.4% GDP growth vs. 1.6% prev), this after the ECB cuts estimates for European growth yesterday and the OECD did the same for the global economy last week. Happy days!

While consensus for job additions (+90K) has been adjusted down on account of Superstorm Sandy, and so will be well below November’s 171K, the number always has potential to surprise and remains explicitly linked to the US Federal Reserve’s (Fed) money printing QE programme (and thus the USD). The unemployment rate is seen flat at 7.9%.

The fiscal cliff remains as dominant as ever with commentary continuing to swing back and forth from politicians converging to growing further apart on the issue of tax increases. Asian markets also helped by traders looking to a raft of Chinese data (inflation, industrial production) over the weekend which may provide more signals that slowing growth may be behind us.

Overnight macro data included a worsening in the Australian trade deficit, although slightly better than consensus, while Japanese economic activity indicators were mixed and German Labour Cost growth slowed.

Today’s main events will be the afternoon’s US employment data (see above), however, given the UK’s cut in growth forecasts the October figures for Manufacturing and Industrial production will be of interest (consensus mixed) this morning along with German Industrial Production (flat) after this morning’s Bundestag growth cuts. Having hit recent highs, Uni of Michigan confidence will also be keenly watched.

Yesterday’s trading failed again to see the UK’s flagship index make a decisive break of the long term falling resistance zone around 5920-5930, which is being reinforced every day that it holds. There is still potential for a correction back to 5860, maybe even further after the sharp gains of the last 3 weeks. US employment figure could be the swing factor this afternoon.

In FX, the GBP/USD found support at 1.604 after a sharp sell-off from recent highs of 1.612. The lows coincide with rising support from 15 November. EUR/USD shows similar sharp fall, but rather than find support at 1.295, the pair has broken down again this morning after the poor growth outlook by the German Bundestag. Next stop 1.288?

In commodities, Gold has regained the $1700 level despite the USD strengthening. Has support now kicked in at $1685 1-month lows, although we note resistance around $1705 which was prior support. The Oils (US Light Crude and Brent Crude) rebounded from recent lows and despite USD strengthening although news that the US may use Brent as its reference price may weigh on the former. US Light Crude bounced off $85.6 and trendline of rising lows, while Brent Crude rebounded from new 1-month lows at $106.75.

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

• Aussie Trade Balance Better
• Japan Leading/Coincident Indices Mixed
• Germany Labour Costs Growth slowed
• See Live Macro calendar for all details

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

• Frontier Mining says CEO quits after govt appointment
• Air Partner U.S. strength offsets slow Europe trade
• Bellway says well placed to deliver growth
• Tate & Lyle pension scheme in 347 mln stg buy-in deal
• James Halstead on track to beat last year’s profit
• Berkeley Group posts 41 pct H1 profit rise
• Polar Capital assets rise to $5.55BN
• Wincanton names Adrian Colman group finance director
• Gemfields buys additional interest in Mozambican ruby project
• Photo-Me confident on year progress