Support 6132 6113 6108 6073 6071 6040 6026
Resistance 6139 6185 6201 6209 6240 6245
Good morning. Another sell in May day yesterday which saw a low at 6090 later on – a level which has held so far as support. The gold short at 1289 yesterday worked well, and actually dipped below the target area before bouncing back. Unfortunately most indices just sold off from the open so the short orders were missed. Despite a weaker Asia session the out of hours FTSE has seen a rise to 6135 and the pivot area. I wouldn’t be surprised if we get a bit of a bounce going for a bit of a dead cat bounce/relief rally before more downside, maybe as far at 6240 where we have the 10 day Bianca or 6260 which is 50% of the 6430 to 6100 move.
US & Asia Overnight from Bloomberg
Asian shares slid for a seventh day, their longest losing streak of the year, and the dollar extended gains versus the yen. Australia’s currency strengthened after retail sales and trade figures beat estimates, while crude oil climbed toward $45 a barrel.
The MSCI Asia Pacific excluding Japan Index sank to its lowest in about four weeks, while U.S. and U.K. stock index futures advanced. Malaysia’s ringgit fell to its weakest level since March as the Bloomberg Dollar Spot Index held near a one-week high.
The Aussie advanced against all of its G-10 counterparts. Crude rallied after data showed U.S. output fell the most in eight months and as wildfires disrupted production in Canada. Financial markets are shut for holidays in Indonesia, Japan, South Korea and Thailand.
April data for manufacturing and services in the world’s leading economies point to a subdued outlook for global growth, while falling corporate earnings in the U.S. are doing little to revive an equities rally that’s petered out over the past two weeks. Stan Druckenmiller, a billionaire investor with one of the best long-term track records in money management, said Wednesday the bull market in stocks has “exhausted itself” and that gold is his largest currency allocation.
“Markets seem to be at something of a crossroads at present, waiting for clearer signals on whether U.S. activity will bounce back in the second quarter,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. “If the global economy were to tip into recession at some point, what ammo, precisely, do central banks have left that won’t do more harm than good?”
Federal Reserve Bank chiefs in Atlanta and San Francisco said this week that a June interest-rate hike could be on the cards and a U.S. employment report on Friday will help shape the market’s assessment of the likelihood, which Fed Funds futures currently put at about 10 percent.
A private-sector report on Thursday showed growth in China’s services output moderated in April, while the European Central Bank is due to publish its monthly Economic Bulletin. A gauge of how the U.K.’s service sector is performing is also scheduled and earnings are expected from companies including BT Group Plc, News Corp. and Repsol SA.
The MSCI Asia Pacific excluding Japan Index fell 0.3 percent as of 12:23 p.m. in Hong Kong, with all but one of its 10 industry groups posting losses.
A gauge of Hong Kong property stocks fell to a four-week low, led by a 2.5 percent slide in New World Development Co., after Goldman Sachs Group Inc. downgraded its assessment of the sector and forecast a 20 percent slide in the city’s home prices. National Australia Bank Ltd. jumped as much as 4.1 percent in Sydney after it reported an increase in profit. Crown Resorts Ltd., the gaming company of James Packer, surged as much as 5.8 percent after announcing the sale of an $800 million stake in its Macau venture.
Futures on the S&P 500 Index rose 0.3 percent, while those on the U.K.’s FTSE 100 Index were up 0.6 percent. Contracts on the Nikkei 225 Stock Average added 0.3 percent in Singapore, after sliding 1.2 percent in the last two sessions.
The dollar rose 0.1 percent to 107.15 yen, building on a 0.6 percent gain over the last two days. Japanese markets resume Friday after a three-day holiday. The Bloomberg Dollar Spot Index climbed 1.2 percent over the last two days as the probability that the Fed will raise interest rates this year climbed back above 50 percent. U.S. employers added at least 200,000 workers for a third month in April, according to a Bloomberg survey before the Labor Department releases the data on May 6.
“We’re probably at a bit of an inflection point for the dollar,” said Ray Attrill, co-head of currency strategy at National Australia Bank Ltd. in Sydney. “We’ve come down a long way with virtually any tightening in 2016 priced out, but we’re at a point when there’s almost too much bad news in the dollar. Having said that, we’re on guard for a softer employment number.”
Australia’s dollar strengthened 0.5 percent versus the greenback. The nation’s retail sales increased 0.4 percent in March from the previous month, while the trade deficit was smaller than economists forecast. The ringgit weakened as much as 0.5 percent.
The Philippine peso fell to a two-month low as the May 9 presidential election draws closer. The currency has been weakening for three weeks as the mayor of Davao City, Rodrigo Duterte, rises in opinion polls. Duterte ranked third in a Bloomberg survey last month that asked analysts who was the best candidate to run the economy.
The Turkish lira rebounded 0.7 percent versus the dollar. It tumbled 3.8 percent on Wednesday as markets reacted to a deepening rift between President Recep Tayyip Erdogan and Prime Minister Ahmet Davutoglu that’s set to end with the premier stepping down from his job later this month.
West Texas Intermediate crude climbed 2 percent to $44.65 a barrel. U.S. oil production dropped by 113,000 barrels a day to 8.83 million a day last week, the lowest level since September 2014, data showed Wednesday. Fires in Canada may affect more than 1 million barrels a day of capacity, according to company statements and data published in Alberta’s Spring Oil Sands Quarterly.
“The trend of declining U.S. production is a real positive,” said Michael McCarthy, chief strategist at CMC Markets in Sydney. “I expect prices will probably touch the $48 to $50 zone. We will have to see significant inroads into crude stockpiles to push through that area.”
Gold for immediate delivery rose 0.1 percent, after sliding more than 1 percent over the last three days. Nickel led declines among industrial metals, falling 0.9 percent in London.
Australia’s government bonds rose, pushing the 10-year yield down by five basis points to a two-month low of 2.38 percent. The rate on similar-maturity U.S. Treasuries fell two basis points to 1.78 percent in the last session.
Inner Mongolia Nailun Group Inc.’s yuan-denominated bonds due 2018 traded at 31 percent of face value, down from a 2016 high of 98 percent on April 19. The Chinese fertilizer maker said it wouldn’t be able to meet payments due Thursday on the notes, becoming the eighth issuer to default this year in the world’s second-biggest economy. [Bloomberg]
FTSE 100 Outlook and Prediction
FTSE 100 Prediction
For today I wouldn’t be surprised if we get a bit of a bounce now the 6090 level has been tested. As mentioned above I think we might even get as far as the 6220 area which is 38.2% of the 6430 to 6090, and possibly the 6260 level (50%). We also have the 10 day Bianca channel at 6240 for today. The 30min chart is slightly bullish, though the 2 hour has resistance at 6155 to start things off today. If the 30min stays bullish this morning then we may well get a green coral appearing which would bode well for a bit of a push up over the next day or two. We also have NFP tomorrow which will start to weigh on traders minds today, forecast is 200k versus 215k last month. However, ADP employment missed estimates yesterday which may well be the same for NFP tomorrow. With gold falling from the 1300 level, we may see some equity buying over the next day or two. I have plotted the blue arrows for my preferred route today which is the 6110 area holding, and a rise to the 6200 area where we have the 200ema, however the pink line if if it overshoots and goes down a bit further to the support area at 6070. This area is worth a long if seen, and we also have the bottom of the 10 day Bianca at 6073.