Good morning. Another volatile session yesterday which wasn’t really much of a surprise, with the FTSE hitting a high last night at 6120. The Fed hinted at a less likely rate rise in September now, which isn’t much of a surprise, though they are still saying that the data is strong. But the recent stock market weakness might cause them to delay. Asia stocks closed up for the second day, taking the FTSE up with it, though its now near the top of the 10 day Bianca at 6103.
US & Asia Overnight from Bloomberg
Asian stocks rose for a second day after U.S. shares halted a six-day rout.
The MSCI Asia Pacific Index gained 0.9 percent to 127.93 as of 9:05 a.m. in Tokyo. The Standard & Poor’s 500 Index jumped 3.9 percent, the most since 2011. Two things that have supported U.S. stocks in the past, dovish words from the Federal Reserve and improved economic data, halted a plunge that erased $2.2 trillion from equity values.
Global market turmoil has weakened the case for raising U.S. rates in September, Fed Bank of New York President William C. Dudley said, cautioning that it’s important not to overreact to short-term developments. Chinese stock-index futures signaled a rally, as contracts on the FTSE China A50 Index gained 1.7 percent.
“Solid U.S. economic data, stimulus efforts from the Chinese central bank and signs that the Federal Reserve are backing off from a September rate hike helped,” said Jasper Lawler, a London-based market analyst at CMC Markets. “Anxiety is likely to maintain a tight grip over investors until the wild gyrations in share prices calm down and signs of a bottom are put in markets.”
Japan’s Topix index rose 2.4 percent. South Korea’s Kospi index gained 0.5 percent and Australia’s S&P/ASX 200 Index climbed 0.7 percent. New Zealand’s NZX 50 Index rallied 1.3 percent.
The S&P 500 rose the most since November 2011 in New York, while the Dow Jones Industrial Average jumped 619 points, or 4 percent. Trading was subject to the same fluctuations seen in overseas markets. A surge in the first few minutes of trading was more than halved before an afternoon rebound took over. E-mini futures on the S&P 500 added 0.1 percent Thursday. [Bloomberg]
We are starting off fairly positive after a decent US session that saw the S&P and Dow break back above fairly key round number levels (1900 and 16000) by some margin, and off the back of a positive Asia session. We are however just nearing the top of the 10 day Bianca and raff channels at the 6100 area so we may well see a pull back to the daily pivot at 6025 initially, though there is a pretty decent 10min rising channel in play, which has support at the 6075. There is also support on the 30 min at 6075 so the bulls might use this as an entry level to build on last nights gains. If the 6103 holds as resistance it might be worth a short here though to be honest over the next couple of weeks I am still feeling like we will see a bounce and am looking at 17250 on the Dow. That should tally with taking the FTSE back to 6500, so buying the dips does still feel like the right thing to do and I am still thinking that the Fed won’t cut rates in September, reinforced by Dudley’s comments yesterday.