Support 6266 6256 6225 6208
Resistance 6284 6292 6306 6318 6379
Good morning. Fairly flat FTSE yesterday which only managed to rise to the 6300 shorting area after hours (in anticipation of Apple results, which disappointed and meant it fell back), though the Dax and S&P trades worked well. Gold bounce back from the 1232 area and is currently 1242. Big item to watch today is the Fed meeting concludes with a rate decision announced at 7pm this evening, with a near zero chance of an increase. 09:30 sees UK GDP, forecast at 2%, down from 2.1% previously.
US & Asia Overnight from Bloomberg
Asian shares fell for a fourth day, led by technology stocks, and U.S. stock index futures declined after Apple Inc. reported its first quarterly sales drop in more than a decade. Australia’s dollar sank by the most since February, while oil climbed to a five-month high.
The MSCI Asia Pacific Index was set for its longest losing streak in two months and futures on the Nasdaq 100 Index dropped as Apple tumbled more than 8 percent in after-market trading. Australia’s dollar weakened versus all 31 major peers and the nation’s bonds rallied as an unexpected decline in consumer prices spurred bets for an interest-rate cut. South Korea’s won and the yen led gains against the greenback before a Federal Reserve policy meeting concludes Wednesday. U.S. crude extended its rally after closing above $44 a barrel for the first time since November, while silver prices advanced.
The world’s three most valuable companies — Apple, Alphabet Inc. and Microsoft Inc. — have all released disappointing results in the past week, painting a bleak picture of the technology sector as most American companies’ profits prove more resilient than analysts anticipated. Three-quarters of Standard & Poor’s 500 Index members to have reported so far beat estimates in what was forecast to be the worst U.S. earnings season since the global financial crisis.
The latest earnings were “pretty disappointing,” said Angus Nicholson, a Melbourne-based market analyst at IG Ltd. “We may see weaker volume as investors hold off ahead of the Fed meeting today and the BOJ tomorrow.”
Fed Funds futures reflect zero chance of an interest-rate hike this week, though the monetary authority’s comments will be scrutinized for any hints of a move in coming meetings. The Bank of Japan will review monetary policy on Thursday and Prime Minister Shinzo Abe’s economic adviser said Tuesday it’s possible that it will announce increases in its purchases of government bonds and exchange-traded funds.
Stocks
The MSCI Asia Pacific Index was down 0.6 percent as of 1:19 p.m. Tokyo time. Standard & Poor’s 500 Index futures slipped 0.3 percent, while contracts on the Nasdaq 100 slumped 1.1 percent. Apple supplier Murata Manufacturing Co. fell 4 percent in Tokyo. Canon Inc., the world’s biggest camera maker, tumbled by the most in three years after cutting its full-year operating profit forecast by 17 percent.
“If a company posts double-digit declines in earnings, it’s going to get whacked,” said Chihiro Ohta, senior strategist at SMBC Nikko Securities Inc. “I think we’re going to see quite a few companies post drops like that.”
Japan’s Topix index fell 0.7 percent, Hong Kong’s Hang Seng Index declined 0.2 percent and the Shanghai Composite Index was little changed. Australia’s benchmark rose 0.2 percent, led by banks.
Futures on the FTSE 100 Index fell 0.1 percent before the U.K. releases details of its economic performance in the first quarter. Gross domestic product probably increased 0.4 percent from the prior three months, a Bloomberg survey shows.
Currencies
Australia’s dollar slid 1.5 percent versus the greenback after a report showed consumer prices fell 0.2 percent in the first quarter from the previous three months. The odds of an interest-rate cut at the central bank’s next policy meeting on May 3 surged to as much as 50 percent from 15 percent on Tuesday, according to a Credit Suisse Group AG index based on swaps.
“A pre-emptive May cut is surely now a real possibility,” said Gareth Berry, a foreign-exchange and rates strategist at Macquarie Bank Ltd. in Singapore. “At the latest, an August cut is now inevitable. That spells the end of this three-month-old Australian dollar rebound, and the downtrend can now resume in earnest.”
The won led gains in Asia, climbing 0.4 percent against the dollar, and the yen strengthened 0.2 percent.
Commodities
West Texas Intermediate crude rose 1 percent to $44.47 a barrel, building on last session’s 3.3 percent jump. U.S. inventories dropped by 1.07 million barrels last week, the industry-funded American Petroleum Institute was said to report, before the government releases stockpiles data on Wednesday. The World Bank also boosted its forecast for oil prices this year, projecting that refinery demand will pick up and U.S. output cuts will steepen in the second half of 2016.
Industrial metals declined, with copper falling 0.5 percent in London.
Silver rose 0.6 percent to an 11-month high, extending gains after it entered a bull market last week. Output from mines will fall for the first time since 2011, while demand for the metal in uses including industrial products and jewelry is heading for a fourth straight gain, supporting prices, according to CPM Group.
Bonds
U.S. Treasuries rose, snapping a seven-day losing streak that was the longest in almost three years. The 10-year yield fell two basis points to 1.91 percent. Futures markets assign zero probability to a rate increase when the Federal Open Market Committee concludes its two-day meeting Wednesday, and less than a 20 percent chance of a move in June, even after evidence that some officials argued in favor of an April rate increase at their last meeting.
Australia’s government bonds reversed losses after the inflation figures were released. The 10-year yield dropped six basis points to 2.60 percent, having been around 2.70 percent prior to the data. [Bloomberg]
FTSE 100 Outlook and Prediction
We have had a bit of a drop off from the 6300 level that was tested just prior to the results last night, and I think we might see some further downside later so I back to thinking shorting the rallies is a good move today. There is initial resistance at 6292 on the 2 hour chart, with the 200ema at 6306 above that on the 30min chart – so shorting around this area looks worth a go. However, we are not far off the bottom of the 20 day channel which has held twice so far in recent days – a third test might see it broke though, and if it does then a trip down to 6225 and lower looks likely. If the bulls were to break 6306 then 6379 top of the 10 day Bianca is the most likely next stop. I am feeling a bit more bearish than bullish though so don’t think that we will see that today unless there is surprising news, either for GDP or the Fed later this evening. We do have support at 6265 on the 2 hour chart now from the Hull moving averages, as well as the 20 day Bianca at 6256 so if we test this area today then we may see that holding for a while initially.