Mike van Dulken and Henry Croft at Accendo Markets commented to clients this morning:

FTSE 100 Index called to open +10pts at 7465, after yesterday’s 7550 breakout extended to 7570 overnight, suggesting appetite for a revisit of June’s 7600 record. Just shy of the highs, Bulls require a break above 7575 while Bears want to see a re-test of the 7550 breakout to re-open the door to the recent 7420-7550 range. Bullish 7575, Bearish 7550.

Calls for a positive open come thanks to GBP remaining under pressure after yesterday’s dovish hike from the bank of England, helping the FTSE’s significant international contingent. Gains for Miners on Australia’s ASX may flow into London trading as oil holds around recent highs and metals gained on improved China Services PMI. President Trump’s Fed Chair nomination Powell caused no ripples, while Apple nears the $1tn valuation mark after strong results and a positive outlook buoyed Tech after hours, ahead of the monthly US jobs report.

In corporate news this morning, International Consolidated Airlines ups guidance for 2018-22 period versus that given for 2016-2020. Smith & Nephew cuts 2017 guidance to the lower end of range previously given. TP ICAP: CFO Andrew Baddeley steps down immediately; 4Q outlook remains challenging. Lonmin says op review, and potentially significant outcomes, means audited FY results delayed.

In Europe, there is potential read-across from oil major Repsol beating Q3 forecasts with an 88% rise in profits, echoing positive updates from BP and Shell this week. IAG may also benefit from Air France-KLM reporting Q3 profits +32% as load factor and traffic improve. Banks may smart at French giant Société Générale’s Q3 net income falling more than forecast.

US equity markets, with the exception of the record breaking Dow Jones, closed around breakeven yesterday as investors digested a new Fed chief and the proposed Republican tax plan. The Dow thundered to a new record closing high as heavyweights Boeing, Goldman Sachs and 3M led risers, while the S&P 500 also closed higher as the Financial sector rallied to offset Housebuilder underperformance. The Tech-focused Nasdaq closed just shy of breakeven.

Note well-received Apple results overnight saw the world’s largest company rocket to fresh all-time highs after hours, as the iPhone maker pointed to a strong sales outlook, accentuated by the $1000 iPhone X, helping it briefly to a market capitalisation above $900bn.

Crude Oil benchmarks are retreating from overnight highs as the US dollar tests falling highs resistance from Wednesday’s week-long highs. Brent Crude failed to regain a $61 handle overnight, 50 cents shy of Wednesday’s highs, while US Crude retreats after attempting to regain a $55 handle. The US dollar will likely drive sentiment until the Baker Hughes Rig Count this evening.

Similarly, Gold is retreating from yesterday’s fresh 2-week highs after the precious metal spiked on the announcement of the proposed Republican tax plan. After climbing to a high of $1284, gold fell to $1275 in a matter of hours, although overnight it attempted to return to $1279. However, US dollar strength has hampered the safe haven asset, seeing it return to $1275 lows.

In focus today, after all the excitement of yesterday’s UK rate hike and new Fed Chair nomination, will be the US monthly jobs report and fabled Non-Farm Payrolls (12:30pm). Then again, with September so impacted by storms (-33K), it’s a given that October sees an element of mean reversion (+310K consensus), similar to Wednesday’s ADP (+235K vs +200K est).

Revisions may also be in play after September ADP was revised down (110K from 135K) meaning September’s NFP contraction may, in fact, have been even more pronounced. But the two don’t always correlate, and with Unemployment at lows, Fed watchers remain focused on Earnings growth (2.9% est vs 2.7% prev) for inflationary read-across, still supportive of another pre-Christmas Fed rate hike.

Closer to home this morning, UK PMI Services (9.30am) is forecast down a touch in October, closer to 2017 lows. This afternoon, US PMI Services (1.45pm) is expected to a jump back close to 2017’s near 2yr highs, although ISM Non-Manufacturing (2pm) may have likely pulled back from last month’s spike to a 12-year high, while September Factory Orders held firm after August’s rebound.

Following the nomination of colleague Powell to the ascendancy at the Fed, Minneapolis ‘uber-dove’ Kashkari (4:15pm) participates in a Q&A session at the ‘Women in Housing and Finance’ conference in Washington, while his ECB counterpart Coeure (8:15pm) sits on the panel at an IMF event entitled “The Global Financial Cycle – Causes, Consequences, and Policy Responses”.

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