Support 6256 6249 6247 6175 6173
Resistance 6273 6285 6286 6311 6350
Good morning. Nice short yesterday from 6323 which was pretty much the high, nice when it just tags the order rather than just missing as is sometimes the case! The FTSE 100 has dropped off a bit since then, and the bears will need to break 6247 this morning to continue the downward slide. Global stocks are still trading near their highest levels of 2016, having rallied since February as commodities recovered from a quarter-century low to enter into a bull market this week. Hillary Clinton is one step closer to the POTUS job now too, having secured the Democratic nomination.
US & Asia Overnight from Bloomberg
- Chinese imports declined less than economists forecast in May
- Shanghai, Hong Kong shares pare losses along with Aussie
Asian stocks recovered from earlier losses and South Korea’s won extended gains as Chinese trade data showed imports into the world’s biggest trading nation fell by less than economists forecast. Crude oil traded above $50 a barrel.
The MSCI Asia Pacific Index climbed to a six-week high as shares in Shanghai and Hong Kong pared losses. Japan’s Topix swung to a gain as the yen gave up most of its earlier advance. Futures on the S&P 500 were little changed after the benchmark closed within 1 percent of its all-time high. The Bloomberg Dollar Spot Index fell to a one-month low as the won strengthened versus all 31 major peers. Oil added to gains from the last session, when it closed at the highest since July 2015 in New York. Japan’s 20-year bond yield sank to a record low.
The China data suggests “things have stabilized, which is better than what it was a few months ago, but stabilization does not mean bull market,” said Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management. “Most people are still a little bit careful and cautious.”
Global stocks are trading near their highest levels of 2016, having rallied since February as commodities recovered from a quarter-century low to enter into a bull market this week. Signs of stability in China’s economy are supporting investor sentiment after the World Bank cut its 2016 global growth forecast on Tuesday to 2.4 percent from 2.9 percent. Mixed economic reports in the U.S. curbed speculation in the past week that the Federal Reserve will raise interest rates in the coming quarter.
China’s exports declined 4.1 percent from a year earlier in dollar terms last month and imports fell 0.4 percent, the least since 2014, data showed Wednesday ahead of a two-day holiday in the nation. South Africa is due to report first-quarter economic growth and the U.K. will release details of its industrial output in April. The U.S. will report on job openings and Brazil’s central bank is expected to leave its benchmark interest rate at a nine-year high following a policy meeting.
Stocks
The MSCI Asia Pacific Index rose 0.2 percent as of 1:18 p.m. Tokyo time, having been 0.1 percent lower before the Chinese trade figures were released. Japan’s Topix rose 0.4 percent, while Hong Kong’s Hang Seng Index fell 0.3 percent and the Shanghai Composite Index slipped 0.4 percent. Taiwan’s Taiex was headed for its highest close since March.
Kumho Tire Co. jumped as much as 14 percent in Seoul after Korea Economic Daily reported that Germany’s Continental AG was planning to acquire a 42 percent stake.
Currencies
The Bloomberg Dollar Spot Index fell 0.1 percent as the yen strengthened 0.2 percent. South Korea’s won gained 0.6 percent versus the greenback, after a 1.8 percent surge on Tuesday that marked its biggest gain in six years. Australia’s dollar weakened 0.1 percent, retreating from a one-month high. Taiwan’s dollar gained 0.4 percent, headed for its highest close since August 2015.
The British pound rose 0.1 percent, after strengthening 0.7 percent on Tuesday. One-month implied volatility in the currency — a gauge of projected swings in the exchange rate — doubled in the past two weeks to a seven-year high. Danske Bank A/S is telling clients to hedge against currency losses that will affect more markets than just the pound as Britain’s June 23 referendum on its European Union membership draws closer.
Commodities
West Texas Intermediate crude oil rose 0.4 percent to $50.55 per barrel. U.S. crude stockpiles are estimated to have fallen for a third week, trimming a glut. Crude has surged about 90 percent from a 12-year low in February amid unexpected disruptions and a continuous slide in U.S. output, which is under pressure from the Organization of Petroleum Exporting Countries’ policy of pumping without limits.
Nickel rose 0.9 percent in London and copper gained 0.4 percent as zinc extended Tuesday’s retreat from a 10-month high. Gold climbed 0.3 percent.
Bonds
Japan’s 20-year bonds advanced, pushing their yield as low as 0.205 percent. South Korea’s three-year bond yield dropped to a record 1.39 percent, below the central bank’s benchmark interest rate of 1.50 percent. The Bank of Korea is due to review interest rates on Thursday and Goldman Sachs Group Inc. stands alone in forecasting a rate cut in a Bloomberg survey of 18 economists at financial institutions.1MDB Energy Ltd.’s dollar bonds due May 2022 fell by the most in four weeks, boosting their yield by six basis points to 5.33 percent, after Moody’s Investors Service withdrewits rating on the notes, citing “its own business reasons.” Malaysia’s troubled state investment company 1Malaysia Development Bhd. said Wednesday its liquidity position is “strong.” [Bloomberg]
FTSE 100 Outlook and Prediction
For today I think we might see some continued bearishness. However, we have a 9.7 dividend this afternoon which will more than likely see the bulls appear late afternoon before the bell as the divi hunters buy in for the divi. Its worth going long (or even opening a one touch binary) about half 3, 4pm and closing out just before the bell. The 2 hour chart has swung to a bearish stance on the moving averages that I use, with resistance at 6274, however it does also have support at 6247 from the coral, so a fairly tight range and it will be interesting to see which one breaks. We have dropped off the 10 day Bianca channel yesterday from 6323, and the top of that for today is 6311 so any second test of that is worth a short. Looking at the 30min chart, there is resistance at 6284 from the coral and the daily pivot (thought the live charts one is slightly higher at 6293), but I feel that if we get a rise to these levels then shorting here is worth a go. The 10 day Raff channel is heading downward at the moment so a slight bias for the bears. I have plotted an initial dip down to the 6250 area, however, the 30min 200ema is at 6256 for support as well, so the bulls might be keen to defend this area and be quick out the blocks, as the bears have had it their way since 6323 yesterday. Basically I am shorting the rallies, apart from a long near the end of the day for the dividend.