Good morning. Happy New Year – here’s to a healthy, wealthy and prosperous 2015! Bit of a bounce from the year end lows set after that sell off on New Years Eve, which set up the first annual fall on the FTSE100 since 2011, with worries about a fresh eurozone crisis and the collapse of the rouble hitting the London stock market in the final month of the year. I will keep todays post fairly brief and normal service will be resumed on Monday. 6563 is todays pivot so initial resistance there, and a break above that will most likely reach 6600.
Asia Overnight from Bloomberg
The dollar rose to its highest level in more than five years and U.S. stock-index futures advanced before the release of American factory data. Oil gained with silver, while tin dropped.
The Bloomberg Dollar Spot Index strengthened 0.4 percent at 1:30 p.m. in Hong Kong. The yen retreated 0.6 percent and the euro headed for its lowest level since June 2010. Standard & Poor’s 500 Index futures increased 0.5 percent. Bonds of Kaisa Group Holdings Ltd. plunged to record lows after the Chinese developer defaulted on a loan. Crude in New York advanced 1.2 percent, following its biggest annual loss since 2008. Silver gained 1.5 percent, while tin fell 0.7 percent.
The dollar is extending gains after its best year since at least 2005, while the S&P 500 climbed 11 percent in 2014 and Treasuries returned the most in three years. Investors piled into U.S. assets as the Federal Reserve pledged patience in raising interest ratesand data showed the economy grew the most in the third quarter since 2003. A U.S. manufacturing index maintained expansion in December, economists project.
“While the Fed is not going to rush into any action, rates will go up,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company. “The market is very long the dollar against the yen and the euro, and across the board.”
The yen retreated to 120.44 against the the U.S. currency. The euro dropped 0.4 percent to $1.2054, extending its worst annual loss since 2005. Strategists, who were too timid with their call for a decline in 2014 to $1.28, now see a drop to $1.18 by the end of this year.
The Markit Economics index of U.S. manufacturing probably rose to 54 from a preliminary 53.7 reading, according to economists polled by Bloomberg.
China Output
The Australian dollar declined 0.7 percent to 81.29 U.S. cents. A Chinese factory gauge slipped to the lowest level in 18 months, data released yesterday showed, adding pressure on policy makers to do more to support growth in the world’s second-biggest economy.
Indonesia’s rupiah depreciated 1 percent, poised for its biggest loss since Dec. 15, and Malaysia’s ringgit weakened 0.4 percent.
Equity markets in Japan, China, Taiwan, New Zealand, Thailand and the Philippines are closed today.
The dollar-denominated MSCI Asia Pacific excluding Japan Index added 0.2 percent. The Hang Seng Index gained 0.8 percent, while the Hang Seng China Enterprises Index of mainland companies traded in Hong Kong rallied 2.2 percent as financial shares jumped. Nikkei 225 Stock Average futures traded on the Chicago Mercantile Exchange rose 1 percent to 17,580.
Malaysia’s benchmark stock gauge slid 0.7 percent, extending last year’s 5.7 percent decline. Korea’s Kospi advanced 0.5 percent.
West Texas Intermediate crude rose 55 cents to $53.82 a barrel. Silver futures for March delivery climbed to $15.83 an ounce, after tumbling 4.2 percent on the last day of the year. Copper headed for its lowest close since June 2010. Tin extended last year’s 13 percent slump.
China’s Purchasing Managers’ Index fell to 50.1 in December from 50.3 in November. That compared with a median estimate of 50 in a Bloomberg News survey of analysts. A separate manufacturing index by HSBC Holdings Plc and Markit Economics also declined.
FTSE Outlook
Initial resistance is at the pivot at 6563, with another calculating at 6566 so not much in that, but also making it quite a key level. If the bulls can break that 6566 then we should get a rise to 6600, with 6625 above that if they really go for it. On the bearish side, support is at 6548 initially, with the bottom of the 10 day Bianca at 6534 below that. I have plotted slightly optimistic arrows for today as we have broken above that 30minute channel and are currently back testing it; coupled with the 10 day Bianca at 6534 I think that area will hold as support. But its low volume, end of holiday period so likely to still be a bit choppy.