Support 5900 5890 5871 5820
Resistance 5953 5974 5976 5986 5998
Good morning.
Market Summary for Tuesday
The correlation of the oil price and the markets persisted today with oil initially below $30 then rising quickly on possibilities of oil production cuts by suppliers. The FT100 was initially down over 100 points but managed to close above 5900 on the rumours. Fortunately it turned just after the long took at 5785 and well done to those that managed to run that up to 5850 or more. The main sector gainers were oil and commodities with some travel companies the weakest.
US & Asia Overnight from Bloomberg
Asian stocks rose after a rally in U.S. equities, with Japanese shares jumping and industrial companies leading gains.
The MSCI Asia Pacific Index gained 0.9 percent to 118.83 as of 9:03 a.m. in Tokyo, while Japan’s Topix index added 2 percent. The regional gauge is heading for a 9.9 percent decline this month as concern about a slowdown in China and a rout in oil and other commodities sent shares tumbling. The Standard & Poor’s 500 Index rebounded 1.4 percent on Tuesday as investors looked past another selloff in Chinese stocks to focus on a rally in crude and better-than-forecast earnings. Attention now turns to central banks, with both the Federal Reserve and the Bank of Japan reviewing policy this week.
“We could see a short-term rally,” Angus Nicholson, an analyst at IG Markets Ltd. in Melbourne, said by phone. “A lot of the markets around are trading at such low levels that they tend to draw buyers back into the market. We won’t be calling a bottom just yet. We’re probably going to see weak economic data from China in the first quarter and that’s going to add pressure on oil prices.”
E-mini futures on the S&P 500 dropped 0.6 percent. After U.S. cash markets closed, Apple Inc. forecast a decline in sales for the first time in more than a decade, adding to evidence that the market for smartphones is becoming saturated and that expansion in China is no longer enough to maintain the company’s unprecedented run of growth.
Regional Gauges
South Korea’s Kospi index rose 0.8 percent. Australia’s S&P/ASX 200 Index lost 0.7 percent as it opened after a holiday, with investors awaiting inflation data. New Zealand’s benchmark gauge added 0.3 percent.
Futures on the FTSE China A50 Index advanced 1.1 percent in most recent trading, while those for Hong Kong’s Hang Seng Index climbed 1.8 percent. Chinese data on industrial profits for December are due Wednesday.
The Shanghai Composite Index slumped 6.4 percent on Tuesday to the lowest close since December 2014 amid concern capital outflows may accelerate as the economy slows. Outflows jumped in December, with the estimated 2015 total reaching a record $1 trillion, more than seven times higher than the whole of 2014 based on Bloomberg Intelligence data dating back to 2006. [Bloomberg]
FTSE Outlook and Prediction
After yesterdays rise I am feeling a bit more optimistic that we will see 6000, and probably the 6050 level I have mooted a few times. However, we have resistance at 5950 first thing today which is worth a tentative and risky short (yesterdays risky long at 5785 actually turned into the trade of the day, if the price hadn’t dropped back to trigger the breakeven stop) with 5975 and then 6000 above that. If the bulls break 6000 then 6050 is very likely, and possibly even 6100. Just to match up the FTSE with what I think oil will do, I am thinking a rise from this $30 level to $35 but then another decline to $16 – that would tally with a bit more upside on the FTSE and then further downside towards the 5400 a level also mentioned previously.) Anyway, for today, we have the daily pivot at 5871 for some support if we do drop off 5750 early on, however with the arrows I have been a bit more optimistic and gone for a rise to 5980 where we have 2 PRT lines then a dip to 5930 before a rise to 6000. It is going to be an interesting day as we also have the Fed later releasing their latest rate announcement at 7pm. No dividend today either. In other US new, at 3pm we have some housing data which is forecast to show a month slow down to 2% from 4.3% previously. So, generally feeling bullish today but watch 5950, 5975 and 6000 for short entries and get stops to breakeven ASAP – one might turn into a runner and see some downside, otherwise it will pop up to the next level of resistance.