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

UK 100 Index called to open -5pts at 7445, back from 7460 overnight highs but holding 7430 support – Friday’s lows, Wednesday’s bullish breakout. Bulls need a break above 7460 for a fresh challenge on 7500. Bears hope for a breach of 7430 support to trigger a bearish head & shoulders top reversal back to 7360 at the very least. Watch levels: Bullish 7460, Bearish 7430.

Calls for slightly negative open come after a mixed start to the week in Asia as investors prepare for a jam packed week with earnings season accelerating, OPEC/NOPEC meets in Russia to discuss their next move on production cuts and the Fed delivers its last policy update before September. Traders are also digesting another eventful White House weekend after press secretary Sean Spicer quit and the IMF cut its US growth forecasts. The latter follows a weak Q1 and is based on fiscal policy being less expansionary than thought as Trump struggles to deliver on policy and stimulus.

The German DAX may be weak at the open due to an investigation into Auto sector collusion and EUR/USD nearing 2yr highs amid EUR strength (ECB close to taper) and USD weakness (Fed policy update this week, White House uncertainty). The weak USD has brought GBP/USD off its lows but it remains well shy of its recent 10-month highs thus hindering the UK 100 much less than its German counterpart which trades 3-month lows as a result.

In Asia, Japan’s Nikkei  is being pulled lower by financials and  industrials although the Yen is off its highs. Australia’s ASX is down to the same degree (-0.6%) and hampered by the same sectors, prevented from worse by Oil off its lows (talks of lower US output due to a lack of operators and equipment offsetting OPEC supply worries) and buoyancy among metals derived from USD weakness.

In corporate news this morning, Ryanair reports Q1 net profit +55% (sales +13%) thanks to but echoed like peers last week ) warned overcapacity will continue to pressure fares. Reckitt Benckiser announced a rise in pretax profit thanks to lower exceptional costs, but like-for-like revenues fell. In Bank land, after US majors saw their Fixed Income divisions struggle in Q2, a Financial Times article says analysts are forecasting Barclays and Deutsche Bank to have been hit hardest in among European investment banks.

With 45.6% of UK 100 companies reporting this week (measured by index weighting), over a hundred names from Europe and over a third of the S&P500 intensifying already heavy flow from the US, earnings are likely to a big sentiment driver over the coming days. US companies reporting later today include Google parent Alphabet (after-market), Alcoa spin-off Arconic and Oil services giant Halliburton.

US equity markets closed lower across the board on Friday as weak corporate earnings and falling oil prices weighed on bourses. The Dow Jones underperformed, closing over 30 points lower as General Electric’s disappointing numbers weighed on the index, while the tech-focused Nasdaq broke its longest winning streak since February 2015. The S&P500 also finished weaker as Energy and Industrial names suffered.

Crude Oil prices have rallied from Friday’s lows as investors look ahead to today’s OPEC and non-OPEC producers’ meeting in St Petersburg. Both Brent and US benchmarks fell by almost 3% on Friday to 2-week rising lows support following a report detailing rising production from the bloc. While global Benchmark Brent has recovered to trade above $48, its US equivalent remains subdued below $46.

Gold traded a fresh 4-week high of $1257 overnight as the US dollar remains near a 13-month low and political tensions, primarily in the US, aided bullish sentiment. However, a break below overnight lows of $1253.50 as the greenback comes off its lows has placed the precious metal on the back foot. US dollar sentiment will remain a key influence on the precious metal throughout the day.

In focus today will be OPEC and non-OPEC producers meeting in St. Petersburg as they plot their next move to address falling Oil prices on account of the global supply glut. While extending production cuts last time around has seemingly failed to incite fresh bullishness, investors hope the parties will look at deepening current production cuts. Friday’s report showing members openly flouting compliance, however, may take centre stage.

With that said, markets have been surprised by OPEC before in the past 12-months, most notably by the 11th hour November agreement to originally trim production, and de facto lead Saudi Arabia’s effort to reduce exports. Could we be on course for another November showing or will in-fighting from delegates take the headlines?

Data-wise, a range of global Manufacturing & Services PMI releases headline. Numbers start with France (8am), the former expected to slow while the latter accelerates In July, before moving to Eurozone engine room Germany (8:30am), where the same divergence is expected. The headline Eurozone (9am) Manufacturing reading is expected to notch a 12th  consecutive month of growth while the Services component is looking to buck a 3-month downtrend.

This afternoon, US Manufacturing and Services PMI (2:45pm) are both seen ticking higher, while Existing Home Sales (3pm) are expected to edge back in June.

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