FTSE 1oo Support 6680 6676 6660 6643 6578 6513 6428
FTSE 100 Resistance 6713 6715 6724 6728 6772

Good morning. The UK has a new Prime Minister as Theresa May started forming her new line up last night. With May as PM, Hammond as Chancellor, I was expecting her to announce Clarkson as Foreign Secretary, but Boris got that job instead! Today we have the BoE Interest rate decision at 12pm and some are expecting a cut from the current 0.5%.

US & Asia Overnight from Bloomberg

The rally that drove Asian stocks to levels last seen in April showed signs of flagging as investors await details of Japan’s stimulus plans and the corporate earnings season begins in earnest. The pound strengthened before a forecast cut in U.K. interest rates.

The MSCI Asia Pacific Index was set for its smallest gain this week, after rallies in U.S. and European shares stalled in the last session. The Topix index rose in Tokyo and the yen weakened amid speculation Japan could resort to so-called helicopter money, which involves the central bank directly funding government spending. Singapore Exchange Ltd. announced a temporary halt to all equities trading, without giving a reason. South Korea’s won rose following a monetary policy review, while crude oil rebounded from a two-month low.

Tokyo stocks have led the revival in Asian equities this week after Prime Minister Shinzo Abe promised a package of fiscal stimulus. Chief Cabinet Secretary Yoshihide Suga said Wednesday that helicopter money was not being considered, refuting a report in the Sankei newspaper that it was being looked at. U.S. shares are at an all-time high and investors will be looking to see whether better-than-expected economic data have helped arrest a slide in the earnings of America’s biggest companies.
“Investors remain very skittish and it won’t take much to rattle sentiment,” said James Audiss, a senior investment adviser at Shaw and Partners in Sydney, which manages about $7.4 billion. “We’re watching the yen-dollar rate really closely after the calls to do helicopter money in Japan got dialed back.”

South Korea’s central bank left interest rates unchanged at a record low, as forecast by all 20 economists in a Bloomberg survey, and lowered its projections for economic growth and inflation. Singapore’s expansion quickened to an annualized 0.8 percent in the second quarter, from 0.2 percent in the prior three months, data showed. Asian companies reporting earnings include Fast Retailing Co. and Taiwan Semiconductor Manufacturing Co., while JPMorgan Chase & Co. and BlackRock Inc. are among U.S. firms due to announce results.

Stocks

The MSCI Asia Pacific Index added 0.1 percent as of 1:34 p.m. in Tokyo, after advancing 3.6 percent over the last three sessions. The Topix gained 0.7 percent, headed for its highest close in a month. Singapore’s benchmark declined 0.1 percent before trading was suspended on Southeast Asia’s largest stock market.

Nintendo Co. jumped 16 percent to a five-year high, boosted by the success of its Pokemon Go mobile game. China Steel Corp. surged in Taipei by the most since October before the company announces its product prices for September. Hyundai Motor Co. fell as much as 3.3 percent in Seoul after workers in South Korea voted to strike over wages and working conditions.

Futures on the S&P 500 Index were little changed after the U.S. benchmark eked out another record close despite climbing less than 0.1 percent on Wednesday. A Citigroup Inc. gauge that tracks the degree to which the nation’s economic data are exceeding economists’ projections has climbed to the highest level since January 2015. Analysts predict second-quarter profits will drop 5.7 percent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.

Currencies

The pound was 0.4 percent stronger versus the dollar, after earlier weakening as much as 0.3 percent. Thirty of 54 economists surveyed by Bloomberg predict the Bank of England will lower its benchmark interest rate on Thursday, with a majority of those seeing a 25 basis-point reduction to 0.25 percent.

South Korea’s won rose as much as 0.8 percent to a two-month high. The Bank of Korea lowered its economic growth forecast for this year to 2.7 percent, from an April projection of 2.8 percent, and trimmed its inflation estimate to 1.1 percent from 1.2 percent. The revisions were more modest than anticipated and suggest there’s no urgent need for borrowing costs to be cut, said Hong Sup Shin, head of fixed-income at Truston Asset Management in Seoul.The Japanese yen was down 0.2 percent, after earlier strengthening as much as 0.5 percent. Koichi Hamada, a key economic adviser to Abe, said Wednesday that boosting fiscal and monetary stimulus at the same time would be a good strategy, though helicopter money would be a “very risky gamble.”

Commodities

West Texas Intermediate crude oil was up 1.3 percent at $45.32 a barrel, after tumbling 4.4 percent on Wednesday as U.S. data showed an unexpected increase in gasoline inventories.

“Every time we have seen these big pullbacks, there is quite a lot of strong buying around that $44, $45 level,” said Angus Nicholson, a markets analyst in Melbourne at IG Ltd. “There are definitely active participants in the market who are very happy to be picking up oil at that price.”

Gold declined 0.4 percent to $1,337.23 an ounce, after advancing 0.7 percent in the last session. It was trading at about $1,260 before Britain’s June 23 vote to leave the European Union.

Bonds

Australian government bonds led gains in Asia, with yields on notes due in a decade dropping five basis points to 1.93 percent. Similar-maturity U.S. Treasuries yielded 1.47 percent, little changed following a decline of four basis points in the last session. [Bloomberg]

FTSE 100 Outlook and Prediction

There will be a lot of focus on the UK interest rate announcement at 12pm so likely to get a little choppy around then. If they do a rate cut then we might well break through that 6725 resistance area to test the top of the 10 day Bianca channel at 6772. The bulls will be keen to try and get back above 6700 again and hold it this time – despite their best efforts there was a bit of a dip last night at the bell – so maybe the rally is starting to falter a bit now (finally I hear some of you say) as the smart money often enters at the close. As such we probably wont push too far past 6700 today (famous last words). We have the pivot for support at 6680 so the bears will be keen to break below this level, and I am still favouring shorting the rallies today (same as yesterday). If we do hit 6727 today then that will be a 1000 point rally from the low on 24th June – pretty bonkers really. Anyway, I feel shorts around the 6715/6725/6770 (don’t think we will get as high as 6770 but you never know) are worth a go.