Support 6369 6333 6288 6261 6207
Resistance 6366 6370 6400 6409
Good morning. The bears finally stuck their heads above the parapet yesterday and brought the Dax down from that 10500 20 day Raff channel area, and the FTSE from the 6430 resistance that had formed a double top. Asia had a weak Friday session, while in US earnings season Alphabet, Sony and Microsoft reported earnings missed estimates.
US & Asia Overnight from Bloomberg
- Microsoft, Alphabet, Sony profits fall short of estimates
- Shanghai Composite set for biggest weekly drop since January
Asian stocks retreated from a four-month high as the yen held gains and companies including Sony Corp. and Microsoft Corp. reported earnings missed estimates. Crude oil resumed its advance.
Raw-materials producers led declines on the MSCI Asia Pacific Index after commodities prices lost ground on Thursday. Japan’s Topix Index fell from its highest level in more than two months, while the Shanghai Composite Index was headed for its steepest weekly loss since January. Australia’s dollar led gains among the currencies of resource-exporting nations as U.S. crude rose toward $44 a barrel. South Korea’s won was the biggest loser.
U.S. corporate results for the first quarter have mostly beaten projections so far, helping drive an equity rally that this week pushed a gauge of global shares to the highest level since early December. Google parent Alphabet Inc. and Microsoft on Thursday dimmed the picture somewhat as their earnings fell short of analysts’ forecasts, while Sony announced an annual profit that was 9 percent lower than it predicted in January. Rallies in haven assets including precious metals and the yen are a sign investor sentiment remains cautious.
“There’s been scant evidence of sustained earnings growth,” said Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion. “It’s too soon to declare that the earnings recession is over in all regions — things look better in the U.S., but central-bank policy in Europe and Japan appears increasingly deflationary and the prospect for strong economic recovery in emerging markets is still hard to fathom.”
McDonald’s Corp., General Electric Co. and Caterpillar Inc. are among firms scheduled to report earnings on Friday. The European Central Bank on Thursday refrained from adding to the unprecedented stimulus announced in March, while 23 of 41 economists surveyed by Bloomberg predict that the Bank of Japan will ease at a review next week. Traders see zero chance of the Federal Reserve adding to December’s interest-rate increase at a meeting that concludes on Wednesday, Fed Funds futures show.
Stocks
The MSCI Asia Pacific Index fell 0.4 percent, paring its weekly gain to 1 percent, as of 11:53 a.m. Tokyo time. The Topix declined 0.2 percent, Australia’s S&P/ASX 200 Index slipped 0.5 percent and Hong Kong’s Hang Seng Index lost 0.8 percent. The Shanghai Composite Index was down more than 4 percent for the week, reflecting concernthat improving economic data will prevent further stimulus and corporate defaults will rise.
Sony slumped 2.9 percent after the company scaled back expected demand for the sensors and lenses that go into cameras as well as smartphones. The company is assessing the impact of this month’s earthquake in Japan for earnings in the current year. Microsoft and Alphabet declined in after-hours U.S. trading.
Futures on the Standard & Poor’s 500 Index were little changed after the benchmark dropped by the most in two weeks. Contracts on the U.K.’s FTSE 100 Index dropped 0.5 percent.
Currencies
The euro rose 0.1 percent to $1.1302. It jumped as much as 0.9 percent in the last session and subsequently erased the gain as the ECB’s policy statement and President Mario Draghi’s news conference struggled to convince investors that unprecedented stimulus will jump-start growth in the region after years of failing to do so.
The yen was little changed at 109.46 per dollar, after strengthening 0.4 percent on Thursday. Bullish bets on the currency by hedge funds and other large speculators exceeded those benefiting from losses by 66,190 contracts in the week ended April 12, the most in data going back to 1992, according to the Commodity Futures Trading Commission in Washington.
The Aussie climbed 0.3 percent, after dropping 0.7 percent in the last session, and the Canadian dollar gained by a similar amount. South Korea’s won fell 0.6 percent, halving this week’s advance.
Commodities
Oil rose 1.2 percent to $43.71 a barrel, after falling Thursday from the highest level in almost five months amid rising U.S. crude stockpiles and speculation producers will be unable to agree on an output freeze. It’s risen in all but one of the past 10 weeks, including an 8.3 percent jump over the past five days.
Gold was headed for a 1.3 percent weekly gain, while silver climbed to an 11-month high. The latter jumped more than 5 percent for the second week in a row, entering a bull market.
Bonds
The yield on 10-year U.S. Treasuries fell one basis point to 1.85 percent, still 10 basis points higher than at the end of last week. The yield on similar-maturity Australian government debt increased on Friday by three basis points to 2.62 percent.
The yield on Japan’s 40-year bonds fell to a record 0.27 percent. [Bloomberg]
FTSE 100 Outlook and Prediction
With the drop off from 6430 I am feeling that things are weakening a little bit now, and we could be back on for 6300 and possibly lower soon. If we get an early morning rise towards 6400 then its worth a short around this level as the 2 hour chart is bearish after yesterdays declines, with a couple of resistance levels at 6400. On the 30min chart we have 6360 and 6370 as the first hurdles for the bulls to jump which are the coral and pivot lines respectively. A good level to fade in shorts if so inclined. Bear in mind its also a Friday so reduced stakes are a good idea. The 10min chart is showing early support at the 6350 level which is why i think we might get an early rise, but shorting the rallies feels the best plan for today.