Support 6123 6120 6037 6022
Resistance 6185 6191 6224 6228 6238
Good morning I hope you had a good weekend. The bulls fought back on Friday from that 6660 area that we had as support – I had put it as risky long on the trade plan but it turned out to be fairly solid. NFP news was disappointing compared to estimates but the markets didn’t seem to mind – low rates for longer and some chance of further stimulus measures. We now look like we might hit the 6191 level today which is the top of the 10 day Bianca, and possible the 25ema on the daily at 6225.
US & Asia Overnight from Bloomberg
China’s shares were headed for the biggest two-day loss since February and industrial metals declined after disappointing trade data from the nation. Crude oil rallied for a fourth day as wildfires curbed output in Canada, while a pullback in the yen helped revive Japanese shares.
The Shanghai Composite Index slid to an eight-week low, while Japan’s Topix index climbed for the first time in two weeks. The yen fell to this month’s low as prospects for a U.S. interest-rate increase supported the dollar. Copper fell to its lowest in almost a month after imports into China, the world’s top base metals consumer, slipped last month from a record. Oil climbed as high as $45.94 a barrel in New York and gold retreated, after gaining Friday following the release of weaker-than-expected U.S. jobs figures. Japan’s 20-year bond yield fell to a fresh record.
Chinese trade figures released over the weekend showed exports fell 1.8 percent in dollar terms in April and imports dropped for the 18th month in a row, adding to evidence that global economic growth remains subdued. Lackluster corporate earnings are also doing little to boost investor sentiment and several Federal Reserve officials have warned over the past week that U.S. interest rates are headed higher, possibly in June.
“The yen has more scope for losses against the dollar if Fed officials keep their hawkish tone,” Masafumi Yamamoto, chief currency strategist in Tokyo at Mizuho Securities Co., wrote in a note to clients.
Euro-area finance ministers and International Monetary Fund officials will meet Monday to decide whether Greece’s government has done enough belt-tightening to gain another aid disbursement. Germany has factory orders data due for release and companies including Enel SpA and Tyson Foods Inc. will report earnings.
Stocks
The MSCI Asia Pacific Index rose 0.1 percent as of 1:31 p.m. Tokyo time. The Shanghai Composite Index sank 2.2 percent, after sliding 2.8 percent on Friday.
“China’s trade import data in terms of dollars were worse than expected,” said Sam Chi Yung, senior strategist at South China Financial Holdings Ltd. in Hong Kong. “The service economy is becoming important but domestic demand is getting worse. This is generating negative signals for China’s economy and putting pressure on A shares.”
Japan’s Topix rallied 0.7 percent, after dropping 3.2 percent last week. Mitsubishi Heavy Industries Ltd. jumped as much as 9.4 percent in Tokyo after reporting earnings. Benchmarks in Indonesia, South Korea and Thailand fell as trading resumed for the first time since Wednesday. Philippine markets are shut for a presidential election.
Futures on the S&P 500 Index rose 0.1 percent, while contracts on the U.K.’s FTSE 100 Index gained 0.6 percent.
Currencies
The yen weakened 0.2 percent versus the greenback, leaving it up 12 percent for the year. Japanese Finance Minister Taro Aso said Monday that sudden exchange-rate moves aren’t desirable and the government has the means to intervene.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed following its biggest weekly jump since November. The greenback’s reaction to Friday’s U.S. jobs report was muted by comments from Fed Bank of New York President William Dudley, who said in a New York Times interview that it remained a “reasonable expectation” the central bank would raise interest rates two times this year.
The probability of the U.S. central bank hiking borrowing costs at its meeting next month fell to 8 percent after the jobs data, from 12 percent a week earlier, Fed Funds futures show.
The South Korean won sank 0.7 percent from Wednesday’s close, while Indonesia’s rupiah slipped 0.3 percent.
“The dollar is likely to trend higher against emerging-market currencies, particularly if we have more hawkish comments from Fed top officials,” said Qi Gao, a currency strategist at Scotiabank in Hong Kong.
Commodities
Crude oil climbed 1.8 percent to $45.44 a barrel in New York as expanding wildfires in Canada knocked out about 1 million barrels a day of output. Also registering on oil traders’ radar is the replacement of Saudi Arabian Oil Minister Ali Al-Naimi with a close ally of the deputy crown prince. Al-Naimi will be succeeded by Saudi Arabian Oil Co. Chairman Khalid Al-Falih, who has backed the nation’s policy of prioritizing market share over prices and insisted any freeze on production must involve Iran.
Copper, nickel and zinc all dropped by more than 1.5 percent in London. Gold retreated 0.3 percent to about $1,285 an ounce in the spot market, having gained 0.9 percent on Friday after the U.S. payrolls data. Platinum and palladium declined at least 0.8 percent.
Soybeans in Chicago climbed as much as 0.9 percent. China’s imports increased to 7.07 million tons in April from 6.1 million tons in March, the nation’s trade data show.
Bonds
The yield on U.S. Treasuries due in a decade was little changed at 1.78 percent, after climbing three basis points on Friday as a report showed American employers took on fewer workers in April than economists forecast. New York Fed President William Dudley it’s reasonable to expect two moves this year, in an interview with the New York Times published on its website on May 6 following the release of the payrolls figures. Bill Gross, the former manager of the biggest bond fund, said policy makers may act at their next meeting in June.
Japan’s 20-year bond yield fell to an unprecedented 0.22 percent. [Bloomberg]
FTSE 100 Outlook and Prediction
I am watching two main resistance areas now where I think this little bull run we are seeing since Friday might falter. The first one is 6191 where we have the top of the 10 day Bianca and the second is the 25ema on the daily at 6225 (and also R2 today). I think if we see 6225 then that is a good shorting spot. If the bulls break this then 6366 is possible, where we have the top of the 20 day Bianca, though I think its unlikely. Support wise we have the pivot at 6123 as the first main area of support, and while the bulls are currently in control a level that is worth a long off. We also have the 30min coral around this area, which has gone green showing a bullish trend. Below this the 2 hour chart has support at 6078. So, a few levels to watch today really, and with no major news scheduled then I expect we will see the both the pivot and 6191 today.