Support 5891 5885 5871 5836 5794 5760
Resistance 5923 5951 6002 6008 6096
Good morning.
Market Summary for Thursday
The main focus today was the drop in the US dollar which boosted commodity prices and therefore gave a lift to mining and oil shares. This fall in the dollar was created by a reduced expectation for a rate hike in the U.S.
The FT100 had a small ex-dividend of 2.9 so this had little effect. The thing which stood out was the 4 waves of 100 point moves during the day indicating great disparity between bulls and bears.
Commodities were the best performing shares with “safe” shares being amongst the weakest – this pattern tends to oscillate regularly.
US & Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index heading for a weekly loss, after Japanese shares declined as the strengthening yen pressured major exporters.
The MSCI Asia Pacific Index lost 0.5 percent to 120.53 as of 9:16 a.m. in Tokyo. The measure is poised for a 0.7 percent decline this week as Japan’s Topix index erased its gains from last Friday’s Bank of Japan stimulus and the yen headed for its best weekly gain in seven years.
“It’s still way too early to say we’ve found the bottom,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., said by phone. “The nervousness we’ve seen in global markets relates to the strength of the U.S. dollar putting downward pressure on oil and equities. With the dollar looking like it might have topped, the negative dynamic may have been broken. A weaker dollar though means a stronger yen and that makes life more difficult for the Japanese share market.”
Japan’s Topix index lost 1.5 percent, heading for a 4.4 percent weekly loss. The index has wiped out a 5.1 percent rally following the Bank of Japan’s stimulus boost. The yen traded at 116.81 per dollar after rising in the past four days.
South Korea’s Kospi index slipped 0.2 percent. Australia’s S&P/ASX 200 Index retreated 0.4 percent. New Zealand’s benchmark gauge declined 0.1 percent.
China Markets
Futures on the FTSE China A50 Index added 0.2 percent in most recent trading, while those for Hong Kong’s Hang Seng Index gained 0.5 percent. China’s Shanghai Composite Index climbed 1.5 percent on Thursday as the central bank stepped up efforts to ease a cash shortage before mainland markets close for the holidays next week.
Trading volumes could be muted in Asia as investors prepare for next week’s Lunar New Year break. Mainland Chinese markets are closed all week with Taiwan, while Hong Kong is shut for the first three days, resuming Thursday.
E-mini futures of the Standard & Poor’s 500 Index fell 0.2 percent. The U.S. equity benchmark index rose 0.2 percent on Thursday amid a rally in raw-material and industrial shares, as the dollar’s weakness boosted commodity prices and optimism for profits at multinational companies.
Patchy U.S. economic data ignited the dollar’s retreat this week, as concern grows over the vulnerability of the American economy to outside forces. The fixed-income market is all but pricing in zero rate hikes from the Fed this year, as central banks from Asia to Europe have mixed success with their efforts to stymie the turmoil that’s roiled markets in 2016.
While a weaker dollar makes commodities cheaper, and therefore more appealing in other currencies, oil remains an entity unto its own, reverting to losses Thursday as investors focused on the fact U.S. crude supplies are at their highest in more than 80 years. [Bloomberg]
FTSE Outlook and Prediction
Today of course is NFP news at 1330 which makes it fairly hard to predict what its going to do around then. The forecast is 192k, so slightly under the previous report, but around 200k should be seen as a positive. Looking at the FTSE to start the day we have the daily pivot at 5891 for support, but also a bullish picture just starting on the 2 hour chart with support at 5885. As such an early long around this area could be worth a go though I am alway cautious on NFP Friday. Its possible that we rise then dip on the news (buy the rumour, sell the news). We have resistance at the 5921 area where we have the 200ema on the 30min, but we are within a rising PRT channel on that time frame. If the 5871 (bottom of that channel), and just below those 2 other supports, holds then we could well be on for a rise initially. Mind you, if its anything like the recent volatility we might well rise to 6000 in one go! Or drop to 5800! So, generally looking to be long around the 5880 area first thing for an morning rise. If 5871 breaks then 5800 is likely, with the bottom of the 10 day Bianca at 5794. Stay cautious today!