Support 6110 6100 6092 6056 6041 5984
Resistance 6127 6170 6182 6188 6232
Good morning I hope you had a good weekend. The bulls managed push up on Friday from that 6060 low but the 200ema at 6130 held as resistance for a dip just below 6100. However, that 6090 level has held as support since, and we are currently around the 6120 area as I write this. If the bulls can break 6130 and hold above that then we might well be on for a push towards 6180. If the bears are quick out the blocks then 6000 looms large.
US & Asia Overnight from Bloomberg
Asian stocks rose from a one-month low and South Korea’s won weakened after data painted a mixed picture of the world’s two biggest economies. Crude oil climbed to the highest since November and gold advanced.
Japanese equities rallied on optimism a sales tax hike will be delayed, while Shanghai shares fluctuated near a two-month low after a raft of disappointing Chinese data. The Bloomberg Dollar Spot Index climbed to this quarter’s high after a jump in American retail sales bolstered the case for the Federal Reserve to raise interest rates. Thailand’s baht gained after economic growth beat estimates, while the zloty strengthened after Moody’s Investors Service refrained from lowering Poland’s credit rating. Oil traded near $47 a barrel in New York, while precious metals rallied.
China’s retail sales, industrial production and fixed-asset investment data released on Saturday were worse than economists forecast. The nation’s central bank moved to reassure investors that monetary policy would continue to support the economy, issuing a weekend statement that sought to explain a slump in new credit last month. Japan’s economy will be in focus this week, with a gross domestic product report forecast to show the country narrowly avoided falling into a recession in the first quarter. Earnings are due from Mitsubishi UFJ Financial Group Inc. and Japan Steel Works Ltd.
“Global growth remains fragile and uncertainty lingers around the Fed and China,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages about $116 billion. “A June or July Fed rate hike still looks unlikely, but there is a reasonable chance of a September hike.”
The odds of a U.S. rate increase by September are 34 percent, Fed Funds futures show. BlackRock Inc. — the world’s biggest money manager — turned bearish on short-term U.S. Treasuries last week, saying traders have gone too far in discounting the chances of a rate hike this year.
Stocks
The MSCI Asia Pacific Index gained 0.8 percent as of 12:34 p.m. Tokyo time. Hong Kong’s Hang Seng Index rose 1.3 percent from a two-month low and Japan’s Topix index gained 0.9 percent. Japanese Prime Minister Shinzo Abe will postpone a planned sales tax increase as the economy struggles and the country recovers from earthquakes in the southern part of the nation last month, the Nikkei newspaper reported over the weekend.
Currencies
The won sank 0.5 percent versus the greenback as China’s data dimmed prospects for exports to South Korea’s biggest export market. Malaysia’s ringgit weakened as much as 0.5 percent, before paring losses as oil rallied. The Southeast Asian nation is the region’s only major net exporter of crude. The yuan rose less than 0.1 percent.
“Weakness in the latest Chinese economic figures has dampened appetite for emerging-market assets,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “Retail data renewed speculation of a U.S. rate hike, and this has turned the dollar stronger.”
The Bloomberg Dollar Spot Index was headed for its highest close since March as the greenback gained 0.2 percent versus the Japanese yen. U.S. retail sales climbed in April by the most in 13 months and a gauge of consumer confidence surged in early May to an almost one-year high, reports showed Friday.
The baht strengthened as much as 0.3 percent after the release of Thailand’s GDP data. The economy expanded 3.2 percent in the first quarter from a year earlier, more than the 2.8 percent growth forecast in a Bloomberg survey.
Poland’s zloty climbed 0.6 percent against the dollar after Moody’s surprised most analysts by leaving Poland’s credit rating unchanged at a review. The assessment was kept at A2, the fifth-lowest investment grade, though the outlook was lowered to negative for the first time in a decade.
Bonds
The yield on Australian 10-year bonds fell to a record-low 2.2 percent, 32 basis points below its level at the end of April. The Reserve Bank of Australia, which this month cut its cash rate to an unprecedented 1.75 percent, has said core inflation will probably miss the bottom of its 2 percent to 3 percent target range this year and may undershoot into the middle of 2018.
Commodities
Crude oil rose 1.3 percent to $46.84 a barrel in early trading Monday, after Friday’s 1.1 percent loss. China’s refineries processed crude at record rates in April, helping ease a supply glut as the number of active rigs in the U.S. declines. [Bloomberg]
FTSE 100 Outlook and Prediction
We have had a fairly bullish Asian session overnight, and looking at the ASX200 would suggest that the FTSE is likely to climb today. The key will be the 6092 area holding as support, especially on any early weakness. If it does then we will quite possibly get a rise towards the 6180 resistance area, as there are a few bigger timeframe levels here to watch. This includes the 25ema on the daily, the 10 day Raff and and the Bianca channels. The bulls might have a bit of a struggle truing to push past 6200. That said, the 2 hour chart is still bearish, with the red coral providing resistance at 6127, so if the bulls don’t do anything to start with then a drop through 6090 is pretty likely, with a drop to 6041 and possibly 5984 on the cards. Be worth shorting a break of the 6092 support area for a run down, though I haven’t put this in the trade plan. Basically if the long gets stopped, flip to short. The German Dax is closed today just so you know. So, for today, the key levels to look at at 6092 and 6185.