Support 5939 5895 5875 5821 5754
Resistance 5959 5976 6006 6072 6084
Market Summary for Wednesday
Equities have become highly correlated to commodity prices and so are moving almost inline with oil and commodity prices. There was some buying into the close ahead of the FED statement which was not as dovish as had been hoped, so in after hours the markets fell back which may well follow through into today. Basically we had a buy the rumour, sell the news day yesterday – slightly annoying as it moved just past the shorting level at 6000, but not quite to the 6050. However the fall after the Fed allowed a good opportunity to regain short points as gold S&P and FTSE all fell back having slightly exceeded the upper resistance levels I had. Oil shares proved one of the strongest sectors yesterday (on the back of a rising oil price) with banks some of the weakest (related to RBS figures), with Shell agreeing their BG takeover too. As mentioned yesterday I am expecting oil to rise to $35 before dropping again towards $16.
US & Asia Overnight from Bloomberg
Asian stocks dropped, following U.S. equities lower after the Federal Reserve warned that turbulence in financial markets may pose risks to the outlook for the U.S. economy. Financial and consumer-discretionary shares led losses.
The MSCI Asia Pacific Index slipped 0.5 percent to 118.94 as of 9:01 a.m. in Tokyo, with nine of 10 industry groups retreating. The regional gauge is heading for a 9.9 percent slump this month on concern about a slowdown in China and a rout in oil and other commodities. The Standard & Poor’s 500 Index lost 1.1 percent on Wednesday as the Fed said it’s “closely monitoring” developments from China to Europe and in oil for any adverse impact on the U.S. economy.
“The market latched on the Fed’s negative growth comments,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $120 billion, said by phone. “The Fed is acknowledging reality — that the outlook has become more uncertain — and is signaling that there may be fewer rate hikes. It seems central bankers around the world are starting to respond, which ultimately should be positive for share markets.”
E-mini futures on the S&P 500 Index slipped 0.2 percent on Thursday. The Fed left the benchmark rate unchanged at the end of the two-day meeting on Wednesday. Since the U.S. central bank raised interest rates last month for the first time in almost a decade, turmoil in financial markets and a dimming of the outlook for global growth have spurred investors to expect a slower rise in borrowing costs. The median forecast of policy makers in December called for four quarter-point rate increases in 2016. Futures markets indicate that traders see fewer.
Regional Gauges
Japan’s Topix index lost 0.8 percent ahead of Friday’s monetary policy statement from the Bank of Japan. South Korea’s Kospi index fell 0.7 percent. Australia’s S&P/ASX 200 Index dropped 0.7 percent.
New Zealand’s benchmark gauge decreased 0.1 percent. The nation’s central bank left its official cash rate unchanged at 2.5 percent and said it may need to cut interest rates further as falling oil prices and a weaker global growth outlook prolong a period of low inflation.
Futures on the FTSE China A50 Index advanced 0.9 percent in most recent trading, while those for Hong Kong’s Hang Seng Index climbed 0.5 percent. The Shanghai Composite Index dropped 0.5 percent on Wednesday, extending Tuesday’s 6.4 percent plunge as slumping profits at industrial companies increased concern the economic slowdown is deepening.
Crude oil futures fell as much as 1.4 percent on Thursday after climbing 2.7 percent in New York on Wednesday. Stockpiles at the biggest U.S. storage hub dropped even as nationwide crude supplies climbed to the highest level since 1930. [Bloomberg]
FTSE Outlook and Prediction
Well that move up yesterday leading to the Fed announcement was built on sand as it all came dropping back down pretty rapidly. I expect that to follow though to today with a weak to flat sort of day, probably dropping to test the 5895 support area this morning, Its a shame that it didn’t quite reach the 6050 level yesterday for a great short entry, however there is still a change for the bulls to push this a bit higher towards that and possibly the 6100 level. However, I am still thinking that there will be another leg down. We are still nudging the top of the daily channels and it will be interesting to see if we reach 5976 where we have the top of the 20 day Bianca. I haven’t put it in the trade plan but this level is worth a short if seen. The 10 day is flagging 6072, so again, worth a short if seen. If we break below 5895 then the bottom of the rising 30min channel is 58753ish so if that holds then the bulls are still in the game, but if it breaks then it could start gaining quite a lot of bearish momentum so short a break of that too. Basically it looks to be weak bull at the moment!