Support 6261 6242 6220 6219 6163 6157
Resistance 6305 6313 6324 6336 6354 6383
TSO
Good morning. Well, we got the initial rise on the FTSE yesterday as the bulls managed to continue their rally from Friday, and they kept the momentum going to break the 6270 resistance and even manage to hit 6300 before the bears appeared. Not overly strong from the bears though yesterday so probably decided to bide their time. The S&P just missed the 2096 long order before rallying to 2113 so between them they didn’t give the best day yesterday for me. Trading life eh! Charts still look bullish for the moment, however the 10 day Raff channels have switched to a downward trend, and the Bianca channel tops have moved up to 6324/6336 now so thats the next area of resistance to watch. 6220 for support today
US & Asia Overnight from Bloomberg
- Oil slips from 10-month high as gold, industrial metals fall
- Mining shares rally after commodities entered a bull market
Asian stocks rose for a third day and South Korea’s won strengthened after comments by Federal Reserve Chair Janet Yellen quelled speculation U.S. interest rates will be raised in July. Oil retreated from a 10-month high as zinc dropped for the first time in nine days.
The MSCI Asia Pacific Index was headed for its strongest close since April, led by gains in energy companies and raw-materials producers. Futures on the S&P 500 were little changed, after the benchmark rose to its highest since November. The Bloomberg Commodity Index declined, after entering a bull market in the last session. Gold fell from a two-week high, dropping in tandem with industrial metals. The won jumped by the most since March as trading resumed following a holiday in Seoul, while the Japanese yen weakened.
Yellen said Monday she expects to raise interest rates only gradually and held off from specifying any timeframe, a shift from her May 27 stance that a move was probable “in the coming months.” The odds of a rate hike by July dropped to 22 percent in the futures market, after halving to 27 percent on Friday as a report showed U.S. jobs growth in May was the weakest in almost six years. While the prospect of borrowing costs staying lower for longer is giving a lift to stocks and emerging-market currencies, gains may prove short-lived should the global economy remain subdued.
“It seems likely that we will get at most one rate hike this year and that’s positive for equities and commodities,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “Of the beaten-down commodities, the oil market is the best place. We’re already seeing supply cutbacks.”
Central banks in Australia and India are due to announce monetary policy decisions Tuesday, while Taiwan will release trade data. China is scheduled to announce last month’s change in its foreign-exchange reserves, Germany has April industrial output figures coming and a report on U.K. house prices is also expected. The World Bank will issue an update on the global economic outlook, having in January forecast a 2.9 percent expansion for this year.
Stocks
The MSCI Asia Pacific Index rose 0.6 percent as of 12:55 p.m. Tokyo time. Benchmark stock gauges advanced 0.8 percent or more in Hong Kong, South Korea and Taiwan, while Japan’s Topix gained 0.6 percent and the Shanghai Composite Index fell 0.2 percent.
Posco, South Korea’s largest steelmaker, jumped more than 6 percent in Seoul and BHP Billiton Ltd. climbed to a one-month high in Sydney. Inpex Corp., Japan’s biggest energy explorer, rallied 4.5 percent and PetroChina Co. gained 2 percent.
Commodities
The Bloomberg Commodity Index declined for the first time in a week, having ended Monday more than 20 percent higher than its January low. A four-year bear market that pushed raw materials to the lowest level in a quarter century has drawn to an end after supply constraints drove a recovery in everything from soybeans to zinc.
West Texas Intermediate crude oil fell 0.3 percent to $49.55 a barrel, after jumping 2.2 percent on Monday. U.S. government data due Wednesday is forecast to show crude stockpiles dropped for a third week, trimming a glut. Eni SpA said 65,000 barrels a day of supply was halted Friday after a militant attack in Nigeria.
Gold slipped 0.2 percent, trimming this month’s advance to 2.3 percent. Zinc fell 0.6 percent in London, retreating from its highest close since July 2015. Copper, nickel and aluminum slipped as much as 0.6 percent.
Currencies
The Bloomberg Dollar Spot Index rose 0.1 percent, after ending the last session near to its lowest level in more than three weeks.
“A June rate hike is effectively off the table,” said Jason Wong, a currency strategist at Bank of New Zealand in Wellington. “The market is thinking that unless we get a strong bounce-back in employment, then July is not looking likely either.”
The Japanese yen dropped 0.3 percent, paring its gain for the first week of June to 2.7 percent. Australia’s dollar held near a four-week high before a central bank meeting that’s forecast to leave interest rates unchanged. The pound advanced 0.2 percent, after dropping 0.5 percent on Monday after polls showed Britons favor leaving the European Union ahead of a June 23 referendum.
Malaysia ringgit appreciated 0.4 percent as recent gains in oil prices brightened prospects for Malaysia, Asia’s only major net exporter of crude. South Korea’s won surged as much as 1.8 percent versus the greenback as the currency caught up with gains in emerging-market currencies following Friday’s U.S. employment data, which came in worse than the lowest forecasts in a Bloomberg survey. Gains in developing-nation currencies were lost within a week the last three times U.S. payroll figures undershot estimates.
Bonds
U.S. Treasuries due in a decade were little changed, yielding 1.73 percent. Similar-maturity Australian government bonds were also steady and yielded 2.17 percent, near an all-time low.
New Zealand’s 10-year swap rate dropped five basis points to a record 2.795 percent as trading resumed following a holiday. [Bloomberg]
FTSE 100 Outlook and Prediction
Recently after a bull Monday we have been having a bearish Tuesday so we may well see them appear today with a bit more gusto than they had yesterday. I have resistance on the 10min chart at 6290 from a rising channel, and then 6313 for R1. Above that we have the Bianca channels at 6324 and 6336, so a short around the 6330 area is probably worth a go. The coral trend line on the daily chart is still red so a dip down towards 6220 would fit in with a decent looking plan. The bulls were helped last night by Yellen’s speech, in which she said a July rate hike wasn’t likely. On the bearish side, 6220 is support so if they break that then a trip down to 6120 is possible, though the S&P looks like it wants to test the 2134 area where we have the top of the Bianca channels – if so then that will take the FTSE higher than the 6300 area. So, bit of a mixed bag on the bigger picture with a case for rises and falls. However, for today I am watching 6260 for initial support, 6220 below that, and 6325 for resistance.