Good morning. The signs of more economic stimulus measures in China appeared to be the trigger for a strong rally which has been long overdue. Stronger metal and crude oil prices were the main drivers which helped the high beta commodity and oil shares. The continuous talk of a late “Santa” rally also contributed to buyers coming into the market as it broke through resistance levels as they feared being left behind. Today is a half day for trading as well, and initial it actually looks like we might get a dip this morning to the 6165 area, maybe as the recent longs bank profits before the break and curtail the Santa Rally a bit.
US & Asia Overnight from Bloomberg
Asian stocks advanced and crude oil climbed for a fourth day, boosting energy shares, while data showing strength in consumption raised confidence in the U.S. economy. Gold, nickel and the Australian dollar also traded higher.
Equity gauges gained and commodities rallied from their worst rout since the financial crisis after the Standard & Poor’s 500 Index climbed. Shanghai shares fell, paring the biggest quarterly gain among major global indexes. Markets in Australia, Hong Kong and Singapore shut early Thursday, while Malaysia, Indonesia, Philippines and Sri Lanka are closed.
Higher U.S. consumer purchases added to evidence that the biggest part of the world’s largest economy will continue to underpin growth as the Federal Reserve raises borrowing costs. A rally this week is brightening the poor performance of Asian shares in 2015. The benchmark MSCI Asia Pacific gauge is on course to drop 4.6 percent this year for the first back-to-back losses since 2002 amid decelerating Chinese growth and the slump in commodities. Volume was 40 percent below the 30-day average in Australia.
“Equity markets look keen to have a good Christmas break and deal with the hangover of ongoing systemic issues in the new year,” said Angus Nicholson, a Melbourne-based market analyst at IG Ltd. U.S. personal income “was yet another data point that further underlines the improving employment situation. The bounce in commodity stocks is only ephemeral; the ongoing issues for these industries are far from solved.”
The MSCI Asia Pacific Index gained 0.4 percent as of 1:01 p.m. in Tokyo. Australia’s S&P/ASX 200 Index rallied 1.3 percent as BHP Billiton Ltd., the world’s biggest miner, surged 5.3 percent, paring this year’s slump to 33 percent. New Zealand’s S&P/NZX 50 Index rose 0.5 percent, closing at a record high, while indexes in Hong Kong and Singapore advanced 0.5 percent. Japan’s Topix index fell 0.2 percent, while the Shanghai Composite index slid 1.4 percent, paring its gain this quarter to 17 percent.
“Trading volume in China has been declining since the start of December, which could mean that the Shanghai Composite may not be making much headway in either direction for the rest of the year,” said Bernard Aw, a strategist at IG Asia Pte. in Singapore.
Futures on the S&P 500 were little changed after the underlying gauge advanced 1.2 percent Wednesday, erasing its decline for the year. The Stoxx Europe 600 Index jumped 2.7 percent on Wednesday, as all 19 industry groups rose, with miners and energy shares leading gains. [Bloomberg]
FTSE Outlook and Prediction
The last trading day before the Christmas break and it looks initially like we may get a bit of a dip down to the pivot at 6214 and possibly the 6165 area before a bit more bullishness from there. We have had a good gain from the recent 5900 area so I wouldn’t be surprised to see some profit being take off the table this morning. Its possible that we then get a bit more rallying between Christmas and New Year to close the year at the 6350 area after all. Unfortunately yesterdays long order didn’t trigger as the bulls took off from the off and there was very little in the way of pullback. Those members that were still holding Tuesdays 6038 long were much happier after the trending day! Looking at the 10min chart there is a decent looking short set up at 6253ish and if we do get a dip that should run to at least 6214, hopefully 6165. If the bulls break 6255 this morning then I expect we will get a rise to the top of the Bianca 10 day at 6286 and maybe even the top of the 30min channel at 6333. So, might be worth going long at 6272sh if that break does occur, which would be just above yesterdays high. I am favouring the dip and rise today though.
As this is the last post before the break then I’d like to wish you a Merry Christmas/Festive Break and a Happy New Year. Thank you for visiting the website and here’s to a happy and prosperous 2016!