Good morning. It was another volatile day with the markets moving sharply down on geopolitical tensions following the downing of a Russian warplane near the Syrian border. Still, it meant that the 6295 short came good quickly, closing out at 6260 a few minutes after the open. The 6220 support area held during the later stages of the day and there was an afternoon rally on stronger than expected US economic data pushing the FT100 back up towards the 6300 level. The travel sector was the hardest hit following a U.S. travel warning, while oils were strong on oil supply concerns in the Middle East on mounting tensions.
US & Asia Overnight from Bloomberg
Asian stocks fell, dragged lower by Japanese shares as the yen gained after Turkey downed a Russian warplane, fueling demand for haven assets.
The MSCI Asia Pacific Index lost 0.1 percent to 134.37 as of 9:02 a.m. in Tokyo. Japan’s Topix index slid 0.5 percent after the yen rose 0.3 percent against the dollar on Tuesday. Russian President Vladimir Putin said the shooting down of his country’s plane by Turkish forces near their border with northeastern Syria would have “serious consequences.” The Stoxx Europe 600 Index dropped 1.2 percent on Tuesday.
The incident added “to a growing sense of geopolitical unease that has built up since the attacks in Paris,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc.
While European stocks sold off on the warplane news, the impact was more limited in the U.S. as political analysts in Russia and Europe said a major escalation seems unlikely given the risks associated with any conflict between Russia and Turkey, a NATO member. The downing of the plane comes as Brussels remains on the highest-level terror alert amid what officials have called credible terrorist threats and after the U.S. State Department issued a global alert for Americans.
The Asia Pacific gauge is down 2.5 percent this year, poised for its first back-to-back annual declines since 2002 as investors assess the extent of China’s economic slowdown amid preparations by the Federal Reserve to raise interest rates as early as next month.
Australia’s S&P/ASX 200 Index slipped 0.1 percent on Wednesday as consumer firms declined while energy and materials producers rallied after a two-day slide. South Korea’s Kospi index was little changed and New Zealand’s S&P/ASX 200 Index fell 0.2 percent.
Futures the FTSE China A50 Index added 0.2 percent in most recent trading. China has canceled a rule requiring brokerages to hold daily net long positions in their proprietary trading accounts as the nation’s stock market stabilizes following its summer slump, according to people with knowledge of the matter.
E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent. The S&P 500 closed 0.1 percent higher on Tuesday. [Bloomberg]
FTSE Outlook and Prediction
Today’s pivot is 6280 and we have a rising positive trend line (coral) on the 30min at 6275, so a long around this level might well be worth a go. There is a rising channel on the 30min chart with support at 6250 and resistance at 6350. We have a fairly small dividend today of 2.8 points so unlikely to see much buying at the close from he divi hunters today. If the bulls do get the rise from the pivot then 6315 is the first level of resistance that they will need to break. With all the turmoil in the world at the moment the indices are holding up pretty well! If the bulls do play ball today then the top of the 20 day Bianca at 6363 looks worth a short as that would roughly tally with the top of that 30min channel, and also R1 at 6340. On the flip side, if we dip down to 6220 again then this might well be worth a long for a double bottom bounce.