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

UK 100 called to open -25pts, with Asian markets lower after news late last night that US House Speaker Boehner has seen his Plan B ‘stunt’ to limit the tax hikes of the US Fiscal Cliff fail to gain enough support to pass a vote even from his own Republicans in the lower House of Representatives, adding to Democrats’ clear objection and expected failure in the upper House (Senate).

This has increased uncertainty surrounding the issue and the 1 Jan deadline for an automatic hike in taxes and spending cuts dragging European equity futures lower. But don’t worry, as both parties are still hopeful of a resolution in time. Dow Jones futures down over 1% suggest otherwise. Ho Ho Ho.

Overnight macro data suggests a decline in GFK Consumer Confidence in the UK and Germany, as well as Chinese Business Sentiment. Japan’s government left its already downwardly revised economic assessment unchanged, and its coastguard noted the presence of Chinese warships in the waters around the disputed island for the first time since the Japanese election. Risk aversion seen a strengthening in the Japanese Yen (JPY) after its election-fuelled weakening.

US markets had closed quietly after some positive macro data including an upward revision to Q3 GDP, better Personal Consumption, better Philadelphia Fed (especially employment component) and strong Existing Home Sales suggesting consumer confidence.

The UK 100 made yet another higher high last night on fiscal cliff optimism. While this has been undone after the Plan B vote failure, and the 5940 level (resistance turned support) tested. The attempt at 6000 is still possible with real 11^th hour progress in Washington but markets obviously losing patience and prepared to punish political faffing after several years of it in Europe.

In focus today will be UK final Q3 GDP figure which is expected to remain unchanged at an impressive 1.0%, however, with focus having already moved to likely negative growth in Q4, even an upward revision would only likely mean a higher platform from which to fall.  Mid-morning the world is supposed to end. In the afternoon US Personal income and Spending are seen rebounding in November although Durable Goods Orders are seen falling back after October’s good growth. The Uni of Michigan Confidence indicator is expected to close the economic week with a slight improvement.

In FX, GBP/USD has come back off its highs of 1.63 (matching those of late September), shedding gains on some risk aversion surrounding the fiscal cliff. EUR/USD also come back after its spike to above 1.33, on account of the relative weakness of the USD. GBP/EUR remains depressed around 3-month lows of 1.23 on account of EUR strength, but looks to have found some support.

In Commodities, the Oils (Brent Crude & US light Crude) have found some resistance on account of the stronger USD from risk aversion. Gold remains under pressure, but has found support at its 7-month trendline of rising support although we note the breach of 200-day moving average as a bearish signal.

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

• UK                    GFK Consumer Confidence                 Worse
• China               MNI Flash Business Sentiment            Improved
• Germany         GFK Consumer Confidence                 Worse
• See Live Macro calendar for all details

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

• Regus in £40m cash offer for MWB Business Exchange
• Xstrata to up zinc output at Lady Loretta project
• Renold says new CEO Robert Purcell to start in Jan
• Faroe Petroleum says bank facilities increased
• Petroceltic says Algeria gives go-ahead to Ain Tsila field