Good morning, I hope you had a good weekend. Well Friday’s action dropped off the first resistance we had at 6831, but not the second one at 6838 which looked the more likely when I was analysing. The joys of Friday…. and then the bounce off 6785 area for 40 points going into a weekend with the US closed today… desperate to close the month above 6800 I think. Anyway, new month now, end of the summer season so volume should increase now (but probably tomorrow when the US returns). News wise over the weekend its been the same stuff – Russia/Ukraine, Middle East, Gaza etc. but overnight slowing Chinese manufacturing growth has weighed Asia down. FTSE bulls will want to break 6828 today, and pivot support at 6810. Tight range!
Asia Overnight from Bloomberg
Most Asian stocks rose, after the regional benchmark index capped its first monthly drop in four months, as investors weighed whether Chinese policy makers will add stimulus after reports showing slower manufacturing growth.
The MSCI Asia Pacific Index (MXAP) added 0.1 percent to 148.07 as of 12:09 p.m. in Hong Kong, with three shares advancing for every two that fell. The gauge dropped 0.6 percent in August, the first monthly loss since April. European Union governments agreed to impose new sanctions onRussia if the conflict in Ukraine worsens. Two gauges of Chinese manufacturing missed estimates, suggesting Asia’s biggest economy is losing momentum.
“The market seems to be treating bad news as good news,” Nader Naeimi, who helps oversee about $131 billion as Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd. “China may introduce more stimulus as economic data weakens. What’s happening in Ukraine is unfortunate but the damage to the global economy will likely be minimal.”
China’s Purchasing Managers’ Index was at 51.1 for August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing, missing the median 51.2 estimate in a Bloomberg News survey and compared with 51.7 in July. The final reading of a similar gauge from HSBC Holdings Plc and Markit Economics came in at 50.2, versus the 50.3 predicted by economists. Readings above 50 indicate expansion.
Regional Gauges
Hong Kong’s Hang Seng Index rallied 0.2 percent. China’s Shanghai Composite Index and India’s S&P BSE Sensex index both rose 0.6 percent. Australia’s S&P/ASX 200 Index added 0.1 percent.Japan’s Topix index gained 0.3 percent. Taiwan’s Taiex index advanced 0.9 percent.
New Zealand’s NZX 50 Index and South Korea’s Kospi index both fell 0.1 percent. Singapore’s Straits Times Index slipped 0.4 percent. Malaysian markets are closed for a holiday.
Samsung Heavy Industries Co. and Samsung Engineering Co. each gained at least 6.4 percent after the companies said they’ll merge by the end of the year. Hitachi Zosen Corp. (7004) jumped 12 percent after Mizuho Securities Co. raised its rating on the Japanese shipbuilder. Nisshin Steel Co. slumped 5.8 percent in Tokyo after saying it will sell treasury shares.
Pro-Russian rebels attacked two Ukrainian coast-guard vessels for the first time, just hours after the EU agreed to impose new sanctions if the conflict escalates. The EU gave the European Commission a week to deliver proposals that may target Russia’s energy and finance industries.
US Futures
Futures on the Standard & Poor’s 500 Index were little changed today. The U.S. equity benchmark rose 0.3 percent to a fresh record Aug. 29 amid optimism in the strength of the economy. The nation’s financial markets are closed today for a holiday.
FTSE Outlook
With the start of a new month, that rise on Friday, daily pivot support at 6810, 10 day Bianca support at 6803 I think we will see an initial rise this morning to the resistance areas, the first being at 6828. 6836 looks a decent short location as we have the top of a 30 minute channel there, with 6843 above that. As such a short there with a stop above the latter might well be ok for a dip from there, but probably only back down to the pivot. The US is closed today so the FTSE will be doing its own thing, and with the daily 10ema and 10 day Raff also offering support at 6795 a massive sell off is probably not likely, though as always, expect the unexpected! Seems the “imminent terrorist attack on London” was a hoax after all, still at least raising the threat level knocked the tory MP defection to UKIP off the headlines…… hummmmm!