FTSE 100 Support 6815 6810 6801 6791 6774 6773
FTSE 100 Resistance 6840 6847 6851 6866 6902 6955 7043
Good morning. I hope you had a nice long weekend. Decent sell off on Friday after the Yellen speech, took the FTSE100 down to the major support at 6775, which held and saw a bounce back to 6830 yesterday. The bulls will be keen to keep the price above the 6800 level though the 6851 10 day Bianca channel will be resistance initially. The Bears will be keen to break the 6775 area where we have a cluster of the daily Bianca channel supports.
US & Asia Overnight from Bloomberg
Asian stocks rose from a three-week low and South Korea’s won recouped some of the last session’s loss after a rally in U.S. shares bolstered demand for riskier assets. The dollar strengthened versus most peers as investors weighed the odds of a Federal Reserve interest-rate increase.
The MSCI Asia Pacific Index advanced for the first time in three days, led by gains in energy companies. U.S. stock index futures were little changed after the S&P 500 Index closed within 0.5 percent of a record. The dollar appreciated for a fifth day versus the yen, the longest winning streak since March, as the won rose by the most in a week. U.S. crude hovered above $47 a barrel and copper climbed from a two-month low. Australian government debt tracked a rebound in U.S. Treasuries.
Expectations for a U.S. rate increase this year surged over the past two weeks, halting a global equities rally and boosting the dollar, as Fed officials including Chair Janet Yellen said the case for a hike is getting stronger. Fed Vice Chairman Stanley Fischer is due to speak Tuesday on Bloomberg Television, after saying on Friday that it’s possible borrowing costs will be raised in September. A tightening risks destabilizing financial markets as central banks in Europe and Japan use unprecedented stimulus to support their economies.
“Expectations for a Fed rate increase are still driving the markets, as players await Fischer’s comments,” said Yuji Saito, head of the foreign-exchange department at Credit Agricole SA in Tokyo.
Japan’s household spending fell in July from a year earlier, while the jobless rate was the lowest since 1995, data showed Tuesday. Gauges of consumer confidence in the euro area and the U.S. are also scheduled, along with a measure of American home prices. and the Bank of Korea will release the minutes of its last policy meeting.
The MSCI Asia Pacific Index rose 0.4 percent as of 12:46 p.m. Tokyo time. Benchmarks in Hong Kong and South Korea were the region’s best performers, climbing 0.6 percent. Japan’s Topix index fluctuated following a 2 percent jump in the last session.
China Southern Airlines Co., Asia’s biggest carrier by passengers, tumbled as much as 8.3 percent in Hong Kong after reporting a 10 percent slide in first-half net income. Flag carrier Air China Ltd. and China Eastern Airlines Corp. will report earnings on Tuesday, as will Industrial & Commercial Bank of China Ltd. and Bank of China Ltd.
S&P 500 futures were little changed following a 0.5 percent gain in the U.S. benchmark. With the American quarterly earnings season all but complete, almost 80 percent of companies included in the measure beat profit estimates, and 55 percent topped sales expectations. Analysts project net income at the gauge’s members will decline 1.3 percent in the third quarter, which would mark a sixth straight contraction.
South Korea’s won rose 0.6 percent versus the dollar, the best performance among 16 major currencies. That followed a 1 percent decline in the last session, when it was the worst performer.
The Bloomberg Dollar Spot Index climbed to a three-week high as the U.S. currency advanced 0.2 percent versus both the euro and the yen, which was at 102.13 versus the greenback. Futures indicated a 36 percent chance that the Fed will raise rates in September as of Monday, up from 24 percent a week earlier, and Fisher has said U.S. payrolls data on Friday will be key to the central bank’s decision making. The report is projected to show employers added 180,000 jobs this month, following a gain of 255,000 in July.
The risk that the yen will resume its climb to 100 per dollar is “likely to be limited ahead of the U.S. jobs data on Friday,” Masafumi Yamamoto, the chief currency strategist at Mizuho Securities Co. in Tokyo, wrote in a note to clients. “A strong number would refuel expectations for a September rate hike and support the dollar.”
West Texas Intermediate crude was up 0.2 percent at $47.09 a barrel. U.S. oil stockpiles probably increased by 1.5 million barrels last week, according to analysts surveyed by Bloomberg before official data due Wednesday. A tropical depression near Florida that is expected to become a storm by Tuesday is forecast to veer away from the energy-rich western Gulf of Mexico, according to the National Hurricane Center.Copper rose 0.6 percent from Friday’s close in London, where financial markets were shut on Monday for a holiday. That’s the first gain in more than a week. Nickel climbed 0.9 percent.
Australian and New Zealand bonds picked up where the U.S. Treasury market left off, with yields on both countries’ 10-year notes falling at least five basis points. Rates on Treasuries due in a decade increased by two basis points to 1.58 percent, after dropping seven basis points on Monday.
The Fed is “likely to tighten in September, at least as long as the jobs number comes in OK,” Michael Pond, head of global inflation market strategy at Barclays Capital Inc. in New York, said on Bloomberg Television. “Hawkish Fed rhetoric has certainly increased recently. It’ll take a decent number, like 200,000, for them to go.” [Bloomberg]
FTSE 100 Outlook and Prediction
FTSE 100 Prediction
For today I am thinking that the bulls will build on this bounce back to start with, though the 10 day Bianca at resistance at 6851 looks worth a short. Fridays high was 6859 before the drop down to that major support area as well. The 2 hour chart is now bullish again, with support at 6801, though the coral trend indicator is still red (down trend), though if that goes green soon, there is support at 6808ish.
The first day back after a bank holiday can often be a little bit choppy while everything adjusts as well. Based on the slightly hawkish, slightly dovish speech by Yellen, commentators are talking about a September rate rise now, depending on the jobs data at that time.
If the bulls manage to break 6850 today then I think we will more than likely get a rise to the recent highs at 6955, and possibly a push towards 7000, so bear that in mind. Certainly look to go long if the 6866 level breaks. Generally though to start with today things are looking fairly bullish across the charts, with 6850 being the key level for resistance – top of the 10 day Raff and Bianca around here – and 6801 being key support