Good morning. It was another day when it looked like a rebound was likely but was quickly stamped out by more corporate bad news. Anglo American dived after the miner announced restructuring steps, including plans to consolidate and suspend dividends for the second half of this year. This knocked all commodity shares and sent the market falling soon after the open. Continued concerns about the China economy after more poor data also weighed on the markets. As a result mining shares took most of the top spots in the biggest fallers for the day. Interestingly, the 6130 level mentioned in the follow up email was tested (6119 as the low) and we have had a little bounce since). It’s very much risk off at the moment in advance of the Fed’s “possible” interest rate rises so will be interning to see what Yellen says on the 16th, as well as poor news flow. Shouldn’t be too long before that changes to more upbeat again – its all cycles and waves! If the bulls manage to pull away from the 6150 area this morning then we could be on for a rise to 6300 over the rest of this week.
US & Asia Overnight from Bloomberg
Asian stocks fell ahead of China inflation data, with the regional benchmark index headed for a two-month low, as the cheapest iron-ore prices on record weighed on commodity producers.
The MSCI Asia Pacific Index fell 0.4 percent to 130.14 as of 9:01 a.m. in Tokyo, poised for the lowest close since Oct. 6. The gauge extended its 2015 drop to 5.6 percent as oil lingered near its lowest level since 2009 and the decline in iron ore compounded concerns about slowing growth in China. Data Wednesday is projected to show a 45th monthly slide in Chinese producer prices after evidence of ongoing weakness in Chinese trade weighed on global shares Tuesday.
“You’ve got this massive confluence of events conspiring for a negative outcome,” said Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Things are feeding on themselves at the moment as China goes through a period of very weak economic data, overhanging concerns about the Fed raising rates in the next week or so and some company specific things which overall are eroding any positive sentiment.”
Australia’s S&P/ASX 200 Index declined 0.6 percent as the world’s two largest mining firms retreated. Rio Tinto Group fell 3.5 percent, on course for its lowest close since March 2009. BHP Billiton Ltd. slipped 0.9 percent, extending a 10-year low. Rio cut its capital expenditure forecast for 2016 as the producer strives to balance shareholder returns with investing in projects. On Tuesday, Anglo American Plc scrapped its dividend for the second half of this year and for 2016 and said it’s selling assets and closing mines.
Ore with 62 percent content delivered to Qingdao sank 1.1 percent to $38.65 a dry ton on Tuesday, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to May 2009. The raw material peaked at $191.70 in 2011.
Japan’s Topix index slid 0.5 percent as metals companies and developers led losses among the measure’s 33 industry groups. South Korea’s Kospi index was little changed, as was New Zealand’s S&P/NZX 50 Index.
Futures on Hong Kong’s Hang Seng Index slid 0.7 percent in most recent trading, while contracts on the FTSE China A50 Index lost 0.1 percent. Economists predict Chinese producer prices will slide 6 percent in November from the previous year after a 5.9 drop the previous month, with the consumer price index rising 1.4 percent from 1.3 percent.
Futures on the Standard & Poor’s 500 Index added 0.2 percent after the underlying gauge lost 0.7 percent Tuesday. Traders are pricing in an 80 percent chance that the Federal Reserve will lift interest rates from near zero next week. [Bloomberg]
FTSE Outlook and Prediction
Looking at the 30min chart there is a good argument for a bit of a rise to the 6180 area, though we have the daily pivot at 6169 just prior to that which may act as resistance. The 30min moving averages have just about crossed over to bull so if the bulls are quick out the blocks to make that stick then we might well see a bit of a bounce. There is fairly strong PRT resistance at 6182 so we may see a dip from there, and there are 2 30min channels in play – a minor and major – with the minor showing resistance at 6182 and support at 6135, and the major showing resistance at 6215 and support at 6095. I have plotted the blue arrows as my preferred route for today, however, if the bears are out in force then that orange arrow is likely with a dip to that 6095 area. The bulls need 6145 to hold first thing for that first rise of the day to take place.The dividend is just 1 point today so nothing to get excited about towards the close for that.