Support 6357 6339 6326 6316
Resistance 6367 6373 6375 6381 6399 6421 6428
Good morning. We got the consolidation day yesterday with the bulls failing to break the 6375 area and might well get the same again today, as we wait and see the output from the Oil producers meeting in Doha on Sunday. In Asia overnight China’s first-quarter economic growth of 6.7 percent matched estimates, helping stocks that are pricing in an easing of a Chinese slow down.
US & Asia Overnight from Bloomberg
- Oil set for weekly gain before Doha talks on output freeze
- Yen drops with Topix after Japan’s biggest quake since 2011
Asian equities took a breather from their longest winning streak in a year, while South Korea’s won strengthened as a flood of China data added to evidence that a slowdown is easing in the world’s second-largest economy. The yen weakened after Japan’s strongest earthquake since 2011.
The MSCI Asia Pacific Index fell for the first time in eight days. The Shanghai Composite Index slipped from a three-month high and the yuan weakened for a fourth day as China’s first-quarter economic growth of 6.7 percent matched estimates. The won strengthened along with currencies of resource-exporting nations, while the yen was headed for its biggest weekly loss since the Bank of Japan adopted a negative interest-rate policy in January. U.S. crude climbed before major oil producers meet in Doha on Sunday to discuss freezing output.
Friday’s data dump in China showed new credit, industrial output, fixed-asset investment and retail sales all picked up in March, a sign stimulus policies are bearing fruit after the economy expanded last year at the slowest pace in more than two decades. Brightening prospects for China and a rebound in oil prices helped lift global equities over the past two months from their lowest level since 2013. The International Energy Agency said Thursday it expects global crude markets will move closer to balance after a glut that drove prices to a 13-year low.
“The market already had good expectations about the economic data as the recent run-up is driven by optimism about the economic stabilization,” said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai. “Some investors are choosing to sell now that the good news has materialized. The market is now turning its attention to corporate earnings from liquidity.”
Stocks
The MSCI Asia Pacific Index declined 0.5 percent as of 12:17 p.m. Tokyo time, trimming this week’s advance to 4.1 percent. The Topix lost 0.7 percent following a three-day surge of more than 7 percent. A magnitude 6.5 earthquake struck the southern part of Japan late on Thursday, killing nine people and injuring hundreds.
The Shanghai Composite Index fell 0.3 percent and Hong Kong’s Hang Seng Index lost 0.2 percent, snapping a seven-day run of gains.
“The latest economic figures are slightly better than expectations but it remains to be seen whether the recovery can sustained,” said Zhang Gang, a strategist at Central China Securities Co. in Shanghai. “Investors worry whether this could mean less government stimulus policies going forward.”
Currencies
South Korea’s won strengthened 0.4 percent versus the greenback, while New Zealand’s dollar gained 0.5 percent and Canada’s currency advance 0.3 percent. The yen fell 0.3 percent, set for a 1.5 percent loss for the week. [Bloomberg]
FTSE 100 Outlook and Prediction
For today I think we might continue in yesterday’s vein and see a bit more consolidation after the rise that we have had for the past few weeks. There is a meeting oil producers on Sunday where they will discuss possibly freezing output, which will buoy the oil price and in turn boost the FTSE (as the FTSE weighting is such that its geared towards oil and resource stocks). The ASX200 (Australia) had a slow rise for most of their Friday session so we will probably do the same, drifting upwards the cluster of resistance levels around the 6380 to 6400 area. I feel that if we reach the 6395 to 6400 area then we may get a bit of a dip from there ahead of the weekend as some long profit is banked, as the 2 hour chart has had a moving average change to bear and we also have a red coral on the 30min chart now (resistance from that is at 6375). As its Friday it might be a little weird so generally use smaller stakes for the trades but I am mostly watching the 6385/6395 area for a reaction and see what happens there and if we dip from that level. Generally though the rise looks set to continue for the meantime and surpass my wild thought of 6350 that I had a while back! That said, we are nudging the top of the various daily channels, both Raff and Bianca, so a little dip back from the 6400 area would be good.