Support 6145 6144 6116 6114 6082
Resistance 6173 6200 6205 6260
Good morning.
Market Summary for 9th March 2016
The FT100 is still stuck in its range of 6100-6200 where it has been for a few days now.
It is a healthy consolidation after the big moves up from 5500 seen in the last few weeks.
The European Central Bank Rate decision is at 12:45pm so possibly the range could be broken but with a well telegraphed decision it is unlikely. The press conference is at 13:30.
The FT100 dipped at the open but then oscillated around 6150 before settling at 6146, a rise of 20 points.
Banks were the weakest sector with no sector clearly dominating the upside.
Another nice short on the FTSE100 from 6169 this time, which nearly managed to run to the 6110 target but was worth banking parts as it dropped. The Dax and S&P trades were stopped out to the pip (9680 and 1995) and then moved as expected so both of those were rather annoying yesterday!
US & Asia Overnight from Bloomberg
- Won jumps after Bank of Korea leaves interest rates unchanged
- Crude oil trades near three-month high as gold declines
Asian stocks rose for the first time this week and the euro weakened before an expected loosening of monetary policy by the European Central Bank. New Zealand’s dollar fell and its bonds jumped after a surprise interest-rate cut.
Energy producers helped lift the MSCI Asia Pacific Index as crude oil held near a three-month high, while Japanese exporters were buoyed by a retreat in the yen. South Korea’s won strengthened against all 31 major peers after the nation’s central bank refrained from lowering borrowing costs at a review, while the euro declined for a third day versus the dollar. The kiwi dropped to a one-week low and New Zealand’s two-year bond yield tumbled by the most since 2011. Gold fell.
“There’s very strong expectations that we’re going to see further stimulus from the ECB, and the real question is how strong that stimulus will be,” said Chris Green, an Auckland-based strategist at First NZ Capital Group Ltd., a brokerage and wealth management firm. “We’re seeing a more supportive environment for risk assets going forward.”
The ECB is forecast to ease policy via measures including an interest-rate cut and an expansion of its quantitative easing, according to economists surveyed by Bloomberg. That would add to a wave of global monetary stimulus this year that includes a lowering of Chinese lenders’ reserve requirements and Japan’s introduction of a negative interest rate. The International Monetary Fund said Tuesday that volatile financial markets and low commodity prices were heightening risks for the global economy.
Traders are reining in bets on monetary tightening in the U.S., with Fed funds futures indicating a 4 percent chance the Federal Reserve will increase interest rates at a policy meeting next week, down from 10 percent at the start of this month. The Bank of Japan will also review policy next week and Governor Haruhiko Kuroda said Thursday there’s scope for more easing if needed. Chinese inflation data showed consumer prices rose 2.3 percent from a year earlier in February, less than the official 3 percent target.
Stocks
The MSCI Asia Pacific Index rose 0.4 percent as of 1:43 p.m. Tokyo time, with a measure of energy stocks climbing 1 percent. Hong Kong’s Hang Seng Index added 0.8 percent, New Zealand’s S&P/NZX 50 Index advanced 0.8 percent to a record and Japan’s Topix Index gained 1.5 percent.
“There are expectations for easing in Europe,” said Koichi Kurose, Tokyo-based chief market strategist at Resona Bank Ltd. “If there’s nothing, it’s going to be a big negative surprise.”
Toyota Motor Corp., the world’s largest automaker, rallied 2.9 percent in Tokyo. Kansai Electric Power Co., Japan’s second-largest power utility, slid as much as 17 percent after a court ordered it to shut down two nuclear reactors due to safety concerns. Cnooc Ltd., China’s biggest offshore oil & gas company, gained 2.1 percent in Hong Kong.
Futures on the Standard & Poor’s 500 Index were little changed, as were contracts on the U.K.’s FTSE 100 Index.
Currencies
The euro weakened 0.2 percent to $1.0976. It’s dropped almost 3 percent in the past month, making it the worst performer among major currencies. Economists forecast the monetary authority will on Thursday cut its deposit rate from minus 0.3 percent and step up a 60 billion-euro ($66 billion) monthly bond-buying program.
The New Zealand dollar fell 0.4 percent to 66.29 U.S. cents, sliding for a fourth day. The nation’s central bank lowered its benchmark interest rate a quarter of a percentage point to a record 2.25 percent and said further easing may be needed owing to a worsening outlook for the global economy. The change was forecast by just two of 17 economists surveyed by Bloomberg.
The won strengthened 0.8 percent versus the dollar, trimming this year’s loss to 2.9 percent. The Bank of Korea’s decision to leave interest rates unchanged on Thursday was forecast by 11 of 18 economists surveyed by Bloomberg. The other seven predicted a quarter of a percentage point reduction.
Australia’s currency fell 0.2 percent to 74.72 U.S. cents. It touched 75.28 on Wednesday, the strongest since July. Japan’s yen fell 0.3 percent, losing ground for a second day.
Commodities
Oil traded at $38.23 a barrel in New York, after jumping 4.9 percent on Wednesday to $38.29, the highest closing price since Dec. 4. U.S. gasoline consumption was at the highest level since September over the past four weeks, reducing inventories for a third week, according to data from the Energy Information Administration.
Copper was little changed in London, after gaining 1.4 percent on Wednesday, and nickel fell 0.3 percent. Gold declined 0.3 percent, after losing 1.1 percent in the previous two trading sessions.
“A slight retreat in safe-haven demand may be weighing on gold as oil and equities are rising at the moment,” said Helen Lau, an analyst at Argonaut Securities (Asia) Ltd. in Hong Kong. “Gold should go higher as investors expect more easing from the ECB to reflate the economy.”
Bonds
The yield on New Zealand’s two-year bonds dropped 18 basis points to 2.03 percent following Thursday’s interest-rate cut, while that on the country’s 10-year notes touched a record-low 2.91 percent. The Reserve Bank of New Zealand signaled further monetary easing may be needed, saying it’s concerned by a slump in inflation expectations.
South Korea’s three-year bonds erased their gains of the past three days, pushing their yield up five basis points to 1.53 percent. The yield on U.S. Treasuries due in a decade increased by one basis point to 1.89 percent. [Bloomberg]
FTSE 100 Outlook and Prediction
The big “event” today is the ECB and what everyone has been talking about all week, and I expect we will get a bit of buy the rumour, sell the news this morning unless something totally unexpected is announced that will push us higher and break the 6215 recent high. 12:45 is the news releases, with the press conference at 13:30. So, on guard then as it is likely to get a bit choppy. Initially we have some fairly decent looking support at 6144 as both the daily pivot and the 2hour hull moving averages are showing this. Below this then the 10 day Bianca channel is at 6116 (was 6110 yesterday and we bounced just before that after that fall from the 6170). If the 6144 area holds then I think we will get a push up towards 6200 this morning, where we have the 200ema on the daily and also R2. Above this then 6215, and then 6260 for resistance and as this is a daily channel worth a short if we were to get that high. I feel more confident about the morning with a rise towards 6205, after that I am leaning towards a dip back down as I think we have stayed above the 6100 level this week pricing in positive ECB action. It would take something unexpected to break the 6200 level, so I am favouring a dip back down to the 6115 area. Possibly 6000 before too long. I still think the bounce from 5500 is a bit overdone but it seems to be holding alright for the moment. The daily RSI(10) is still hovering around the 61 area, so not overbought but ideally that would be around 40 before another big push up. RSI is an ancillary indicator for me rather than a signal to trade off. So, similar pattern today that we have had for the week really – rise this morning and then dip this afternoon, with 6205 and 6215 being the key resistance levels to watch, and 6116 being the key support below 6144.