Support 5949 5946 5930 5914 5877 5832
Resistance 6004 6058 6073 6086 6100
Good morning.
Market Summary for Thursday
The oil price was up over 5% at one point after Russian officials decided to talk to Saudi Arabia and other OPEC countries about cutting output to boost prices. With no drag from ex-dividends the FT100 looked like it was going to power ahead from the open and soon breached 6000, however profit taking soon kicked when oil prices fell back and equities were further sold off on events at DisneyLand Paris which affected tourism related shares in particular.
The FT100 quickly fell 100 points to go below 5900 but managed to close around 5931. This shows how traders are still very nervous and any bad event sends them running for cover. It will probably take a few days or weeks of consolidation before a broad based rally can hold.
For our trades I had 6008 resistance and 5895 support – didn’t expect both levels to be taken but ended up being a rather good day.
US & Asia Overnight from Bloomberg
- Friday is the busiest day of Japanese reporting season
- U.S shares gained Thursday as investors digested earnings
Asian stocks climbed, extending a weekly gain, after U.S. equities rallied with oil and as investors awaited a Bank of Japan decision on monetary policy.
The MSCI Asia Pacific Index increased 0.2 percent to 119.80 as of 9:01 a.m. in Tokyo. While the regional gauge is heading for its first weekly advance in four weeks, it’s still poised for a 9.2 percent slump this month on concern about a slowdown in China and a rout in oil and other commodities. Speculation that central banks around the world will intervene to steady financial markets helped shore up investor confidence over the past week. The Fed left key U.S. interest rates unchanged and said officials were “closely monitoring” developments from China to Europe for any adverse impact on the economy.
“After the big selldown we’ve seen in the early part of January, we’re seeing a bit of stabilization,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said by phone. “Is this the calm before the next storm or is this a real opportunity to come in and start buying cheaper assets? I still think we’re in for a very tough year.”
Japan’s Topix index rose 0.7 percent. The BOJ meeting that will end with a policy announcement Friday is one of the most anticipated gatherings since Governor Haruhiko Kuroda’s debut decision in April 2013 to launch his monetary easing program. Only six of 42 economists surveyed by Bloomberg are predicting that Kuroda’s board will expand already-record stimulus.
Government data showed the nation’s core inflation increased 0.1 percent in December from a year earlier, in line with economist estimates, while industrial production fell more than expected.
Japan Earnings
Friday is also the busiest day of Japan’s earnings season, with 333 companies in the 1,934-member Topix scheduled to report. Of the firms in the benchmark gauge that have already posted results and for which Bloomberg has estimates, more than half missed analyst predictions for profit.
Japanese Economy Minister Akira Amari resigned after a week fending off allegations he received money in return for favors. Amari is the most influential minister to step down since Prime Minister Shinzo Abe took office in December 2012. He was Japan’s point man in the Trans-Pacific Partnership regional trade talks, and spearheaded Abe’s strategy to boost the nation’s competitiveness, known as “Abenomics.”
South Korea’s Kospi index lost 0.4 percent. Australia’s S&P/ASX 200 Index rose 0.3 percent. New Zealand’s benchmark gauge was little changed.
China Slump
Futures on the FTSE China A50 Index added 0.1 percent in most recent trading, while those for Hong Kong’s Hang Seng Index slipped 0.6 percent. The Shanghai Composite Index fell 2.9 percent on Thursday as concern that slumping commodity prices and a weakening economy will reduce corporate profits overshadowed the biggest cash injection into the financial markets in three years.
E-mini futures on the Standard & Poor’s 500 Index climbed 0.1 percent on Friday. The U.S. equity benchmark gauge gained 0.6 percent on Thursday as a rally in oil bolstered energy shares and investors digested earnings from Facebook Inc. to Under Armour Inc.
Oil futures gained as much as 1.4 percent on Friday, extending Thursday’s 2.9 percent rally, after Russia’s Energy Minister Alexander Novak indicated he was willing to meet with OPEC next month to coordinate oil-output policy. OPEC delegates said they have no meeting planned with Russia. [Bloomberg]
FTSE Outlook and Prediction
We have had a decent overnight rise in the end with that 5895 long area from yesterday holding well. It was a hard one to know if banking or holding was the best option with the long from there last night. I went for banking it to have a more peaceful sleep! Anyway, for today I expect its to test the fib pivot at 6004 first thing this morning at which point we may well see a bit of a dip back down to the pivot at 5949. We also have R1 resistance at 6011 to content with first thing. If the bulls are able to build on the rise from 5895 then they might reappear at the pivot for a push up to the top of the 20 day Raff at 6055. We also have the daily coral at 6057. We actually spiked up to 6004 overnight also, on Asia news at 0330. As per usual on a Friday I expect it will be a bit odd, though we don’t have any major news out today. If the bears break the 5950 area then a trip back down to 5895 and 5835 where we have the bottom of the 10 day Bianca is likely. I am still expecting 6050/6100 as a toppy area for this rally from 5600, and yesterday oil hit that just below that $35 level I have mentioned ($34.80) so it will be interesting to see if we start dropping on that with the next leg down to $16.