Support 6130 6128 6102 6092 6012 6000
Resistance 6146 6164 6166 6213 6236
Good morning. A great Dax trade yesterday offset the rather lacklustre bounce for the FTSE at 6120 in the end, while gold fell steadily throughout the day, ending up 2% down. The FTSE slowly drifted down towards the pivot as commodity prices have weakened once again, Rio Tinto plc was down 5% at one point yesterday. Worries over global growth have once again weighed on markets as the FTSE has fallen from 6430 to this 6130 level.
US & Asia Overnight from Bloomberg
Japanese stocks rallied as the yen sank to its weakest level of the month, while shares of Asian commodity producers slumped following slides in oil and metals prices. The Philippine peso rose the most since March after an anti-establishment candidate claimed victory in a presidential election.
The Topix index gained for a second day in Tokyo as the yen added to Monday’s 1.1 percent tumble. Mining and energy companies were the biggest losers on the MSCI Asia Pacific Index after a Bloomberg measure of raw-materials prices dropped on Monday by the most since March. Crude oil traded below $44 a barrel, while nickel rebounded from its steepest slide in two months as Japan’s biggest supplier forecast a widening shortage. Malaysia’s ringgit and South Korea’s won were the biggest losers against the dollar among major currencies, while the peso was Asia’s best performer.
“Worries about global growth have re-emerged,” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., which oversees about $120 billion.
“There could be further weakness in the market. Recent news out of China hasn’t helped sentiment.”
More than $1.5 trillion has been wiped off the value of global stocks so far in May as data pointed to subdued growth in the world’s biggest economies. The Bloomberg Commodity Index dropped on five of the last six trading days, after rallying in April by the most since 2010. Changing winds eased the threat of wildfires in Canada, after supporting oil gains on prospects of a drop in world supply.
China’s consumer-price inflation held at 2.3 percent in April, in line with expectations, and declines in producer prices moderated, data showed Tuesday. Industrial output figures are due from France, Germany and Italy while the U.K. is scheduled to report on trade. Credit Suisse Group AG is projected by analysts to report a second consecutive quarterly loss, and earnings announcements are also expected from companies including ING Groep NV, Nokia OYJ and Walt Disney Co.
Stocks
The Topix rose 2.2 percent as of 1:19 p.m. Tokyo time, after climbing on Monday for the first time in two weeks. Chinese stocks in Hong Kong fell for a seventh day, their longest losing streak this year.
“The CPI and PPI were OK but recent economic data hasn’t been as strong as March,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. “Although markets have already dropped a lot, we need more stimulus for investors to buy on dips.”
The Philippine Stock Exchange PSEi Index rose 0.5 percent after Rodrigo Duterte — a mayor who has tapped into middle-class frustrations about rising crime and inefficient public services in the Southeast Asian nation — claimed victory in the presidential election.
BHP Billiton Ltd and Rio Tinto Ltd. slid more than 4 percent in Sydney. Lenovo Group Ltd. dropped to a four-year low in Hong Kong after Morgan Stanley and HSBC Holdings Plc cut their recommendations on the stock.
Futures on the S&P 500 rose 0.2 percent, while contracts on the U.K.’s FTSE 100 Index gained 0.4 percent.
Currencies
The Bloomberg Dollar Spot Index was little changed, after a five-day winning streak that marked its strongest run of gains in almost a year. The ringgit dropped 1.1 percent versus the greenback — the biggest loss among 31 major currencies — as lower oil prices dimmed prospects for Malaysian exports ahead of a deadline for a bond interest payment by a state investment company that defaulted last month. South Korea’s won fell 0.7 percent and the Philippine peso strengthened 0.4 percent.
The yen sank as much as 0.5 percent to 108.86 per dollar, its weakest level since April 28, while the euro was little changed following five days of losses.
The kiwi dropped 0.3 percent, falling for a third day after New Zealand’s Finance Minister Bill English indicated he expects the country’s central bank to signal a plan on dealing with the housing market in a report on financial stability due Wednesday.
Commodities
West Texas Intermediate crude slipped 0.2 percent to $43.36 a barrel, following Monday’s 2.7 percent slide. Canadian producers have begun restarting operations after wildfires led to cuts equivalent to about 40 percent of their oil-sands output, based on IHS Energy estimates.
Nickel rallied 1.2 percent in London, after sliding more than 5 percent on Monday. The market will face a shortage this year as Chinese smelters are joined by other producers in paring output, according to Sumitomo Metal Mining Co.
Bonds
Australia’s three-year bond yield dropped as low as 1.53 percent, a record, following gains in U.S. Treasuries. The latter have handed investors a 3.5 percent return since the end of December as traders pared bets that the Federal Reserve will raise interest rates this year. There’s a 45 percent chance of a hike in 2016, down from 93 percent at the start of the year, Fed Funds futures show. [Bloomberg]
FTSE 100 Outlook and Prediction
For today we have the pivot for initial support at the 6130 level and I feel this may well hold, so as such its probably worth a small long for a rise to test the top of the 10 day Bianca at 6166. The 2 hour chart is now showing some bullish signs with support at the 6100 area – we have the green coral here and also the Hull 100 MA is 6093 support. The bears will need to break this level if they are to reach 6000. However, I think the upside might be limited as we are nearing the top of the 10 day channels, and also have the Raff at 6163, as well as a bearish moving average picture on the daily with resistance at 6213 and 6236. Don’t fall in love with the upside as they say, so if we were to get 6236 then that area looks to be a good swing shorting area. So for today, weak bull I feel, with a bearish move to come again soon, from either the 6166 or 6230 areas….