Good morning. Well that dipped a bit further than I wanted it to yesterday, finding support at around that 6715 level I mentioned that the bulls had to defend. Unfortunately it meant the earlier longs got stopped out (from 6730). The rhetoric continues over Russia and MH17, with increased sanctions looking like the only recourse. With that support holding the bulls need to break 6757 now, though the top of the Bianca channels are hoving into view, being at 6804 and 6831.
Asia Overnight from Bloomberg
Asian stocks rose, with gains in Tokyo and Hong Kong propelling the regional index toward a six-year high, while government bonds rallied with oil. Indonesia’s rupiah strengthened before election results.
The MSCI Asia Pacific Index added 0.6 percent to 147.71 by 1:35 p.m. in Tokyo, heading for the highest close sinceJune 2008. (MXAP) Japan’s Topix index rose 0.8 percent while a gauge of Chinese shares in Hong Kong jumped the most in two months. Standard & Poor’s 500 Index futures gained 0.1 percent after the U.S. gauge retreated 0.2 percent. Australian and New Zealand bond yields fell at least three basis points. Oil climbed 0.5 percent. The rupiah gained 0.5 percent.
Rebels in Ukraine’s east began releasing the bodies of the 298 people killed in the shooting down of a Malaysia Airlines passenger jet last week as European foreign ministers meet to discuss sanctions against Russia today. Chinese shares are rallying as some cities reduce property-market restrictions amid speculation that the central government will do more to support growth. In the U.S., inflation is projected to come in unchanged at 2.1 percent for June, while Apple Inc. (AAPL)and Microsoft Corp. report earnings.
“Markets will start ignoring what’s happening in terms of geopolitics,” Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $131 billion, said in an interview in Sydney. “As sad as it sounds and as tragic the shooting of the plane and loss of life, the broad impact on economic activity is likely to be quite minimal. The broader focus in markets is likely to be economic fundamentals and the earnings season.”
Recovery Progress
U.S President Barack Obama urged a diplomatic solution to the crisis in Ukraine and Malaysian Prime Minister Najib Razak said pro-Russia rebels had agreed to hand over bodies and grant access to the jet’s debris. The insurgents are accused of shooting down the Malaysian plane last week.
The Australian dollar strengthened 0.1 percent to 93.85 U.S. cents. The Group of 20 nations’ growth pledge could “considerably help” revive activity, Reserve Bank of Australia GovernorGlenn Stevens said in a speech that didn’t directly address his nation’s economy or currency.
West Texas Intermediate crude oil advanced 0.5 percent to $105.15, the highest level since July 2, while Brent added 0.2 percent to $107.22. Crude inventories probably shrank by 2.8 million barrels last week, according to a Bloomberg News survey before a report from the Energy Information Administration tomorrow.
Indonesia Election
The rupiah strengthened for a fifth day as unofficial election tallies put Jakarta Governor Joko Widodo on course to become Indonesia’s first leader without ties to the Suharto era. Indonesia’s currency strengthened to 11,518 per dollar after touching 11,505, the strongest since May 21, according to prices from local banks compiled by Bloomberg.
The Jakarta Composite Index, Asia’s second-best performing emerging-market stock measure this month, was little changed. Official results from the election are scheduled to be released at 3 p.m. local time. Outgoing President Susilo Bambang Yudhoyono, whose term ends in October, has urged supporters on both sides to remain calm following the vote.
FTSE Outlook
With that support area at 6715 holding yesterday the bulls have taken advantage and prices have risen to the resistance area at 6757 now (channel on the 10 minute chart), though looking at the 30 minute, I think 6765 and possibly 6777 look likely upside targets. Todays pivot is 6733, so there could be some initial support there today, again that tallies with the 10 minute channel. There is a case for it to head down from these resistance areas, possibly to a double bottom at 6716, though the bottom of the 10 day Bianca channel at 6694 looks more likely for a support base to form. As such, I think shorts off the resistance area could come good today, but as its quite volatile presently, i think wider stops and smaller stakes are better, so that you don’t get (a) stop hunted and (b) stopped out on slight over reaction and movement through levels. For example, the longs yesterday would all have come good, just needed a bit more breathing room as the FTSE is following the arrows, but just moving past the turn points.