Good morning. Am now back in the UK after travelling back yesterday, probably a good day to choose in the end with the US in Thanksgiving holiday mode. The FTSE100 ground up slowly through the day to close near its highs, and nudge the 6400 level during the session. The two main supports were a rally in base metal prices (after falling to multi-year lows) and expectations of aggressive European Central Bank (ECB) action next week. US markets were closed so the thin trade exaggerated today’s move. The main sector to benefit today was commodities on the back of metal price rises.
US & Asia Overnight from Bloomberg
Asian stocks advanced, with a regional gauge reversing its weekly drop, as a rebound in metals spurred gains for materials shares and investors awaited a report on China’s industrial profits.
The MSCI Asia Pacific Index added 0.1 percent to 134.60 as of 9:01 a.m. in Tokyo, with materials and telecommunication shares leading gains. The measure is poised to close the week little changed. Industrial metals surged Thursday after people familiar with the matter said China is stepping up its efforts to support the domestic industry, with the largest copper and nickel suppliers planning to meet this week to weigh their response to the slump in prices. Financial markets in the U.S. were closed Thursday for the Thanksgiving holiday.
“With regards to China, our sense is that there are still significant risks to the global economy but on the other side, that they’ve got the policy ammunition to dampen that risk,” said Chris Green, director of economics and strategy in Auckland at First NZ Capital Group Ltd.
Japan’s Topix index added 0.1 percent. The Nikkei 225 Stock Average climbed 0.2 percent to 19,983.66, closing in on 20,000 for the first time since August. The nation’s consumer prices excluding fresh food fell 0.1 percent in October from a year earlier, in line with economists’ estimates, according to a report released before the stock market opened Friday. A measure of inflation that also excludes energy rose 0.7 percent. The jobless rate fell to 3.1 percent, the lowest since 1995.
South Korea’s Kospi index rose 0.3 percent. Australia’s S&P/ASX 200 Index gained 0.4 percent, while New Zealand’s S&P/NZX 50 Index was little changed. Futures on Hong Kong’s Hang Seng Index added 0.4 percent in most recent trading, while contracts on the FTSE China A50 Index rose 0.3 percent.
China Data
China is due to publish figures on October industrial profits, which slipped 0.1 percent in September from a year earlier. Citic Securities Co. is being investigated by the market regulator because it allegedly violated rules on the supervision and administration of securities firms, the nation’s largest brokerage said in an exchange filing Thursday. Some of the firm’s top executives have already been placed under investigation.
Futures on the Standard & Poor’s 500 Index added 0.3 percent from Wednesday’s close. U.S. equity markets reopen Friday for a shortened trading day. Traders are now pricing in a 72 percent probability that the Federal Reserve will increase borrowing costs at its December meeting.
Next week sees policy decisions from the Reserve Bank of Australia and European Central Bank, before the U.S. reports payrolls figures for November. The International Monetary Fund’s board meets on whether to grant the yuan reserve-currency status, and members of the Organization of Petroleum Exporting Countries will gather in Vienna.
“Traders still need to take into consideration that the investment landscape could change significantly next week,” said Chris Weston, the chief markets strategist at IG Ltd., in an emailed note. “Moves in the U.S. dollar hold the key for all risk assets.” [Bloomberg]
FTSE Outlook and Prediction
We have dropped back a bit from the 6400 level since yesterdays close, with todays emphasis on Black Friday and the retail sector. Its also the day after Thanksgiving in the US which can often see a rise during the US session (share tips discussed over turkey?!). The pivot at 6373 didn’t act as much support overnight, so I think a decline towards the 6350 area where we have the bottom of the 30min channel and the 200ema (30min) at 6340. So, for today I think a decline then a rise towards the pivot at 6373, and possibly higher. However, if the 6350 level breaks then 6305 looks likely, so flip to short on a break of that. We also have the 10 day Bianca at 6310 so worth a long at this level.