Good morning. A lot of people will be glad August is over which was the worst monthly performance for 4 years, but we are not home and dry yet by any means. Markets are still looking for clues for the Fed’s rate rises, while confidence has been knocked by China’s ability to keep powering on.
US & Asia Overnight from Bloomberg
Asian stocks fell, extending the biggest monthly loss since May 2012, as regional shares followed U.S. equities lower and investors awaited reports on Chinese manufacturing.
The MSCI Asia Pacific Index slid 0.2 percent to 129.69 as of 9:01 a.m. in Tokyo. E-mini futures on the Standard & Poor’s 500 Index fell 0.7 percent in most-recent trading after the U.S. benchmark slid 0.8 percent on Monday in New York. The official gauge of China’s manufacturing industry will fall to a three-year low in August, according to the median of economist estimates compiled by Bloomberg before data due Tuesday.
“We should see an extension of yesterday’s losses in the equity market, although how Chinese markets fare is anyone’s guess,” said Chris Weston, Melbourne-based chief market strategist at IG Ltd. “The authorities want “a stable market ahead of the World War II commemorations but how they go about achieving that is not immediately apparent.”
Futures on the FTSE China A50 Index rose 0.7 percent in most-recent trading in Singapore. Contracts on the Hang Seng Index and on the Hang Seng China Enterprises Index of mainland firms listed in Hong Kong gained 0.4 percent.
Fluctuations in Chinese markets in August rattled investors worldwide as they struggle to anticipate policy actions in the world’s second-largest economy. Stocks in Shanghai rallied almost 10 percent over Thursday and Friday on speculation authorities are propping up markets before President Xi Jinping takes the stage at a commemorative parade the government will use to demonstrate its rising military and political might. The city’s equity measure declined 12 percent last month.
China will encourage listed companies to conduct mergers and acquisitions, buy back shares when prices are low and pay higher cash dividends as the government extends efforts to boost share prices. The steps are aimed at increasing the investment value of listed companies and promoting stable and healthy growth of capital markets, the China Securities Regulatory Commission said in a statement posted on its website on Monday.
Australia’s S&P/ASX 200 Index gained 0.1 percent ahead of the central bank’s interest-rate decision. Traders and economists expect the Reserve Bank of Australia to keep its key lending rate at a record-low 2 percent.
South Korea’s Kospi index retreated 0.3 percent and New Zealand’s NZX 50 Index slipped 0.6 percent. Japan’s Topix index fell 0.7 percent after capping a 7.4 percent slump in August.
The S&P 500 posted its worst month in more than three years in August, falling 6.3 percent as investors harbored concerns about slowing global growth and the impact of a potential interest-rate increase by the Federal Reserve. [Bloomberg]
FTSE Outlook and Prediction
Well after August’s volatility I wonder how September is going to play out… We have dropped off a bit from the high over the bank holiday weekend, at 6230, and with the 200ema on the 30min showing support at 6140.If not then the lower support is 6125 where we have a fib retracement level with 6108 below that. The daily channels are offering support quite far below where we are, mainly as the volatility has been high the channels have widened a lot. Both Raff and Bianca have 5800 area as support, which I don’t think we will be testing today. I am still thinking that we recover from the recent loss for a rise towards 6425ish in September, before another leg down (am looking at 17200 on the Dow or thereabouts). For today I can see a rise towards 6200 initially, and we have the top of the declining 30min channel with resistance at 6226, which joins up the 2 most recent highs (6258 and 6230), as such the bulls will be keen to break that level sooner rather than later. For today I am looking at resistance at 6200, 6225, and support at 6140 and 6108.