Good morning. The FT100 got off to what appeared to be a sustainable rally in the morning but ran out of steam by lunch time – a pattern which has repeated a few times now, finishing about 20 points higher at the close. In part it was on the disappointment of no clear guidance from Draghi (the ECB President) on monetary policy in his speech delivered in London today. China data was also slightly weaker than expected overnight. It appears since the hint that US interest rates may rise in December that the FT100 is finding it hard to break away from the 6300 area. The weakest sectors were oils, commodities and housebuilders.
In terms of the trades, the rise yesterday from the 6290 level to start things off went well though 6325 proved to be strong resistance in the end with 2 tests failing to break the 200ema at that area, and then an evening decline down to 6265. The bulls have fought back a bit overnight and we are testing 6285 as I write this.
US & Asia Overnight from Bloomberg
Asian stocks were little changed after a drop in U.S. shares. A stronger yen weighed on Japanese exporters, while energy companies retreated after a decline in oil.
About MSCI Asia Pacific Index was unchanged at 133.06 as of 9:07 a.m. in Tokyo. Japan’s Topix index lost less than 0.1 percent as the yen held gains against the dollar. The gauge rose to a 12-week high on Wednesday, bringing its gain for the year to 13 percent. The Standard & Poor’s 500 Index slid 0.3 percent on Wednesday.
“Japanese markets have been pushed to the limit as well as U.S. stocks,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “We haven’t had bullish factors to lift markets at the moment.”
With U.S. data and policy makers signaling the world’s biggest economy may be strong enough to withstand higher rates, investors are monitoring figures from overseas to gauge whether there are any threats to growth that may still concern the Federal Reserve. Reports Wednesday showed Chinese factory output growth continued to weaken in October, suggesting monetary and fiscal easing have yet to spur any notable acceleration in growth.
The odds the Federal Reserve will raise rates at its December meeting have risen to 66 percent from 39 percent a month ago. Fed officials including Chair Janet Yellen are due to speak a policy conference Thursday.
New Zealand’s S&P NZX 50 Index added 0.2 percent. Australia’s S&P/ASX 200 Index fell 0.4 percent. Markets in China and Hong Kong have yet to start trading.
Chinese Shares
Chinese shares in Hong Kong dropped for a fourth day on Wednesday as weaker-than-forecast growth in industrial output increased concern China’s economic slowdown is deepening.
Wednesday’s data show old growth engines are faltering. Industrial output rose 5.6 percent in October from a year earlier. Fixed-asset investment increased 10.2 percent in the first 10 months, the slowest pace since 2000. Retail sales climbed 11 percent last month, the quickest gain this year.
E-mini futures on the Standard & Poor’s 500 Index were little changed on Thursday. The underlying measure’s drop on Wednesday came amid a selloff in retail shares as Macy’s Inc. missed its third-quarter sales estimates and cut its annual profit forecast.
Crude futures rose 0.5 percent today after sliding 2.9 percent in New York on Wednesday. [Bloomberg]
FTSE Outlook
It looks to have initial support at 6284 as I am writing this so I wouldn’t be surprised if we get an initial rise to start things off at 7am. There is then a declining PRT channel on the 30minute chart with resistance at 6303, so this level is fairly key to start with – if the bulls break this then there is a rise to 6345 on the cards, whereas, if the bears defend that level then a decline to 6250 looks likely. Not too much range to play with first thing with arguments for both scenarios at the moment so will be interesting to see which one plays out. If the 6303 short fails then it will be worth flipping to long, and if 6284 breaks to the downside its worth flipping to short for a run down to 6250, and possibly 6236 where we have the bottom of the 10 day Bianca channel.