FTSE 100 Support 7047 7041 7010 7006 6969
FTSE 100 Resistance 7086 7088 7091 7097 7123 7129 7155

Good morning. Didn’t expect to see 7130 again yesterday but we did and dropped off it a second time to the 7060 level, which has sort of held overnight. The S&P fell for most of the session, but found support at 2130 and bounced back to 2140 by the close – keeping a bit of bullishness intact. Sterling continued to be hammered, hitting 121 at one point against the dollar, but has also bounced back overnight to nearly 123. If cable climbs then the FTSE might see some more bearishness – resistance at 7097 today. The cable rate was the lead story on the BBC news last night, so a short term low is probably in and we will see a bit of a bounce.

US & Asia Overnight from Bloomberg

• Sterling snaps drop with Parliament to discuss Brexit plan
• Oil below $51 amid doubts over Russia’s stance on OPEC deal

Asia stocks dropped for a fourth day as investors fretted about the prospect of U.S. interest-rate hikes and Samsung Electronics Co. extended its slump. Oil held losses on concern Russia isn’t fully committed to an OPEC deal to curb oil output, while the pound rallied.

The MSCI Asia Pacific Index retreated to a three-week low. Samsung headed for its steepest three-day loss in five years after scrapping its troubled flagship smartphone. Sterling rebounded 1.5 percent against the greenback after Prime Minister Theresa May accepted that Parliament should be allowed to vote on her plan for pulling the U.K. out of the European Union. The Bloomberg Dollar Spot Index slipped from its highest level since July as the Aussie strengthened. U.S. crude traded below $51 a barrel.

Investors will scrutinize minutes from the Federal Reserve’s latest decision due Wednesday, with odds of a U.S. rate increase by year-end climbing to 67 percent amid speculation the recent surge in oil prices will fuel inflation. Alcoa Inc. has brought the health of corporate America into focus after disappointing results. May’s decision to give lawmakers a say over Brexit is calming investors after they dumped the pound on concern she was taking a hardline approach to the negotiations.

“Stock markets are becoming nervous about the prospect of rising interest rates against a background of moderate profit growth and relatively high valuations,” Ric Spooner, chief market analyst in Sydney at CMC Markets, said in an e-mail. “Given how critical the interest-rate outlook is at the moment, markets will be focused on the degree of support for a rate hike this year revealed in the Fed minutes.”

Stocks

The MSCI Asia Pacific Index dropped 0.5 percent as of 1:43 p.m. Tokyo time, with raw energy producers and property stocks driving declines. After losses in the U.S. and Europe Tuesday, MSCI’s All-Country World Index headed for its lowest close since Sept. 16.

Hong Kong’s Hang Seng Index declined 1.1 percent in a third day of losses as Bank of China Ltd. and Bank of Communications Co. sank more than 2.5 percent. The Shanghai Composite Index declined 0.3 percent.

In Japan, the Topix lost 0.7 percent. Australia’s S&P/ASX 200 Index dropped 0.2 percent. The Philippine benchmark index retreated for a sixth day, while Thailand’s SET Index declined 1.5 percent.

The Kospi index swung between gains and losses in Seoul as Samsung — the gauge’s biggest stock and the fourth-largest by weighting on MSCI’s Asia-Pacific measure — tumbled 1.6 percent, bringing its three-day rout to 11 percent.

Futures on the S&P 500 Index added 0.1 percent after the underlying benchmark dropped 1.2 percent to a one-month low on Tuesday. Alcoa tumbled the most since 2009 after its earnings trailed analysts’ estimates and the aluminum maker cut forecasts for its jet-part business.

“Investors will focus on corporate earnings and the outlook provided by companies over the next six weeks as the Fed also prepares the market for what looks to be a likely interest-rate hike in December,” James Woods, a global investment analyst in Sydney at Rivkin Securities, said in an e-mail. Coupled with the looming U.S. presidential election and Brexit concerns, “all of this provides multiple factors that have the ability to increase volatility over the coming months,” he said.

FTSE 100 Index futures in the U.K. rose 0.1 percent.

Currencies

The pound climbed to $1.2306 from near a three-decade low. Parliament will debate on Wednesday a motion from the opposition Labour Party calling for a “full and transparent debate on the government’s plan for leaving the EU” and for lawmakers to be able to “properly scrutinize that plan” before she begins formal talks. In response, May tabled an amendment that effectively accepted the motion, adding that there shouldn’t be an attempt to block Brexit or “undermine the negotiating position of the government.”

“Given how aggressively short the pound the market was positioned, the prospect of U.K. parliament at least discussing the downside of a ‘hard Brexit’ has encouraged substantial profit-taking on those positions,” said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney.

The Aussie and the Kiwi strengthened at least 0.3 percent, while South Africa’s rand climbed 0.4 percent after sinking 3.9 percent on Tuesday.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell for the first time in three sessions, declining 0.2 percent Wednesday. The yen was little changed at 103.50 per dollar.

China’s central bank weakened the yuan’s reference rate for a sixth day, the longest run of cuts in nine months, amid speculation policy makers will allow further declines as the dollar rises. The currency was little changed at a six-year low.

Commodities

West Texas Intermediate crude added 0.3 percent to $50.92 a barrel after slipping 1.1 percent last session.

Russia’s largest oil producer, Rosneft PJSC, said it it won’t cut output, according to Reuters, after President Vladimir Putin said earlier this week that his nation would join the Organization of Petroleum Exporting Countries in freezing or cutting supplies. Russia and the producers’ group are due to meet in Istanbul Wednesday to discuss an output pact. Supply and demand will come back into balance earlier than expected if OPEC’s accord to trim output is implemented, the International Energy Agency said.Gold for immediate delivery gained 0.3 percent to $1,256.69 an ounce following a 0.5 percent drop last session, its ninth decline in 12 days.
Industrial metals advanced. Zinc rallied 0.6 percent after sliding the most in 10 months, while copper added 0.4 percent on the London Metal Exchange.

Bonds

Australian government debt extended declines, with 10-year yields rising for a seventh straight day, adding three basis points, or 0.03 percentage point, to 2.28 percent.

Similar maturity Treasury notes yielded 1.77 percent, little changed following a five basis-point jump last session.

U.S. securities due in 10 years or more have lost 5.8 percent in the three months through Monday, the most among 144 government bond indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies. [Bloomberg]

FTSE 100 Outlook and Prediction

Yesterday strength was down to oil rising and sterling weakening – both of which are warning signs for the UK economy I feel. However, I think sterling might see some bullishness today (its already up from yesterday’s low at 121) and as such that could mean the FTSE drops back a bit. The bulls failed to break 7130 yesterday and we are back below 7100 now, with the 2 hour chart once again bearish – resistance is at 7097 for the 100 Hull MA. If the bulls were to break this level today, then a third test of 7130 is likely to break, which would likely see 7155. Above that the Bianca channel tops at 7190 are likely.

However, for today, I am thinking that we will see a bit more of a dip and test the 7050 area, and possibly even 7000 again. The bulls will of course be desperate to hold any test of 7000, though a break of this is likely to see 6969 where we have the 20 day Raff. Below this then it gets bearish “proper” again, with 6890 on the cards. Not much of a dividend today – just 0.8. The daily RSI(10) is indicating a bit of a drop potential, having dropped back down through 70 to stand at 65.