Good morning. Well that bounce from the pivot yesterday was fairly short-lived, with prices falling back down to the 6655 area just after the close. All European stocks declined, amid continued debate over Greece’s fate, and speculation the Federal Reserve will signal a slow pace of monetary tightening. Greek stocks erased earlier gains after Prime Minister Alexis Tsipras said he’s ready to take responsibility for rejecting the terms of a deal on aid if creditors’ demands are unacceptable. The ASE Index fell 3.2 percent to its lowest close since September 2012.
“The situation in Greece is foggy and things can change any second,” said Nicola Marinelli, a fund manager who helps oversee 114 million euros ($128 million) of assets at Pentalpha Capital Ltd. in London. “The U.S. has picked up some momentum compared with the start of the year. The Fed will likely keep its stance and stay the course unless we get a big disappointment in terms of data on the labor market or growth.”
The Fed concludes its two-day policy meeting Wednesday, amid speculation mixed U.S. economic data and a deadlock over Greece may complicate the central bank’s drive to raise interest rates.
Greece
Even as Greek Prime Minister Alexis Tsipras intensified his criticism of the country’s creditors, German Chancellor Angela Merkel has said she will continue to do everything possible to keep Greece in the euro.
Greece has snubbed European pleas to submit a new proposal to avert insolvency, saying it was up to creditors to make the next move. The lenders say it’s the other way around. The focus now shifts to a meeting of finance ministers on Thursday and a June 25-26 summit of European Union leaders.
US & Asia Overnight from Bloomberg
Asian stocks rose for the first time in four days after the Federal Reserve said the pace of U.S. monetary-policy tightening will be gradual, with the central bank preparing to raise interest rates this year.
The MSCI Asia Pacific Index gained 0.4 percent to 146.71 as of 9:01 a.m. in Tokyo. E-mini futures on the Standard & Poor’s 500 Index were little changed after the underlying gauge added 0.2 percent on Wednesday. The Topix index slipped 0.2 percent as the Bank of Japan starts a two-day policy meeting.
The Fed maintained its forecast for the benchmark rate to rise to 0.625 percent this year, while lowering its projection for 2016. A rebound in job growth is giving officials reason to look beyond a first-quarter economic slowdown as they consider when to tighten policy. At the same time, inflation remains below their target, and central bankers say the timing of a rate increase depends on how economic data unfold.
“Yellen was dovish in the press conference,” said David Buckle, London-based head of quantitative research at Fidelity Worldwide Investment, which manages about $285 billion. “She was at pains to point out that monetary policy will likely to remain highly accommodative for a long time after the first rate rise.”
Australia’s S&P/ASX 200 Index fell 0.1 percent and South Korea’s Kospi index advanced 0.6 percent. New Zealand’s NZX 50 Index lost 0.1 percent after the country’s economy grew less than forecast in the first quarter.
Futures on Hong Kong’s Hang Seng Index slipped 0.3 percent and contracts on the Hang Seng China Enterprises Index of mainland firms listed in the city dropped 0.5 percent in most recent trading. Singapore-traded FTSE China A50 Index futures lost 0.1 percent.
Greece’s Prime Minister Alexis Tsipras said he’s ready to assume responsibility for the fallout of rejecting a deal with creditors, with talks among euro-area finance ministers to take place Thursday. Officials from the Netherlands, Portugal and Germany said they were bracing for a breakdown in talks that could roil the currency bloc. [Ref]
FTSE Outlook
It all looks pretty bearish at the moment so we will probably see a rise soon! There is Bianca support at 6624 (10d) and 6608 (20d) today, with resistance at 6775 and 6780 – so a good area to short if it were to get that high with both at similar levels. There is a fairly decent declining channel on the 30min and we are just at Monday low at 6655 again as I am writing this. However this is the 3rd test of this area so we could well see a break lower today (third tests of a level tend to break), but maybe the bulls will step in at 6645 for the bottom of the channel. If we do move lower then a long around 6630 looks viable. The moving averages are pretty bearish at the moment, with the 30min staying so since crossing over after that pivot bounce yesterday fizzled out. Todays pivot is 6689 so we may see a rise to that if the bulls are quick out the blocks this morning.
I have gone for an initial bounce off the channel, however if it starts to break then flicking short down to 6630/20 would be wise. if we break through the Bianca channels then the Raffs have support at 6590 (10d) and 6562 (20d). The ASX200 had a fairly bearish session today so I might be getting too optimistic with a rise to the pivot but we shall see. Short off the pivot is a good play if it does get there.