Good morning. Was a bit early with that long yesterday as it dipped down to 6435 before bouncing, probably a slight overreaction while we have the Greek situation playing out. Anyway, the bulls came back from that level for a rise above 6500 and at the moment the short term charts look alright for a positive day today. A rise in European stocks and a positive budget from Osbourne helped. The U.K. will maintain the pace at which it cuts the budget deficit with the new budget, the first by a Tory majority government since 1996. It is the first time Osborne has been able to set out his plans for tax and spending without being constrained by the Liberal Democrats.
US & Asia Overnight from Bloomberg
Asian stocks fluctuated, with Chinese equities swinging between gains and losses as the government tries to stem the rout. Shares in Hong Kong rebounded while Japan’s Topix index slid.
Citic Securities Co., China’s biggest brokerage, jumped 13 percent in Hong Kong, heading for its first gain in six days. China Life Insurance Co. gained 5 percent after UBS AG raised its rating on the nation’s largest insurer to buy from neutral. Honda Motor Co. slipped 1.8 percent as Japanese exporters retreated after the yen jumped on Wednesday amid China’s rout.
The MSCI Asia Pacific Index was little changed at 139.63 as of 11:18 a.m. in Hong Kong, swinging between a gain of 0.7 percent and a loss of 1.7 percent. China’s securities regulator banned major shareholders, corporate executives and directors from selling stakes in listed companies for six months, its latest effort to stem an equities decline that’s erased more than $3 trillion of value. The Shanghai Composite Index climbed 0.5 percent after dropping as much as 3.8 percent.
“The Chinese government is trying their best to provide support in that market,” James Lindsay, who helps manage the equivalent of about $3 billion in assets at Nikko Asset Management NZ Ltd. in Auckland, said by phone. “The selloff is affecting other markets, such as commodities. That combined with investor nervousness around Greece creates more volatility.”
China’s measures are a sign of desperation and will fuel fear among investors, said Mark Mobius, executive chairman of the Templeton Emerging Markets Group.
Government Support
The Shanghai Composite slumped to a three-month low on Wednesday as another round of government support steps failed to allay concern that investors who borrowed to buy shares will keep unwinding those trades at a record pace. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong, climbed 2.9 percent today, while the benchmark Hang Seng Index rose 3.1 percent, after falling the most since November 2008 on Wednesday.
Chinese inflation rose faster than economists forecast in June, suggesting a stabilization in demand that’s now threatened by the stock market’s rout. The Federal Reserve registered concern over China as early as last month, with meeting minutessignaling potential risks to the U.S. from there and Greece.
Japan’s Topix index slipped 1.2 percent, paring a decline of as much as 3.6 percent. South Korea’s Kospi index fell 0.6 percent. New Zealand’s NZX 50 Index slid 0.8 percent. Australia’s S&P/ASX 200 Index dropped 0.4 percent.
Greece is rushing to pull together a blueprint of reforms to convince European leaders headed by German Chancellor Angela Merkel that it can keep the euro. The government extended capital controls to Monday and Prime Minister Alexis Tsipras has until midnight Thursday to come up with an economic plan that will cut spending in exchange for a new European bailout.
E-mini futures on the Standard & Poor’s 500 Index rose 0.5 percent today. The underlying U.S. equity benchmark index sank 1.7 percent on Wednesday. [Ref]
FTSE Outlook
All looks quite positive first thing this morning for a rise to 6550 where we have 3 key resistance levels – the top of both 10min and 30min channels, but also the top of the Bianca 10 day at 6553. As such I think a short at this area could be worth a go, after a long this morning. We have had an EMA cross not he 30min but not retested the 25ema as yet so I have plotted a little dip down to that though its 50/50 if that will happen. We have rebounded well from the overnight lows and the first bridge that the bulls will need to cross to keep this rise going is the 200ema on 30min at 6519 – may see a bit of a stutter there. That is also just above yesterday high. With Greece ongoing then the market might have a bit of a rise on the hope that some sort of resolution can be found, though this weekend is D-Day. The banks are closed again today there as well and Europe’s creditor powers have been warned against igniting an “uncontrolled” financial and geopolitical crisis in Greece by letting the country fall out of the eurozone at the end of the week. US Treasury Secretary Jacob Lew waded into the crisis, as Athens was preparing to make its final attempt to secure its future in the single currency. The Greeks have been told they have three days to prevent a fatal eurozone exit.