Good morning. It was a choppy day of trading with the FTSE100 oscillating around the 6300 level. The bias was definitely negative with commodity prices hitting their lowest levels in 13 years and the US dollar at its highest in 8 months. The Euro also fell to a 7 month low on prospect of ECB easing. In terms of sectors, commodities and supermarkets were the main losers, the latter on margin concerns which has dogged the sector for some time now. The best sector was defence on announcements of increased government spending.
US & Asia Overnight from Bloomberg
Asian stocks fell as tumbling commodity prices dragged raw-materials shares lower, with BHP Billiton Ltd. on course to close at the lowest since 2008.
The MSCI Asia Pacific Index lost 0.1 percent to 134.16 as of 9:00 a.m. in Tokyo, as Japanese markets opened after a holiday. Material shares led losses among the regional measure’s 10 industry groups. The increased likelihood of a Federal Reserve interest-rate increase this year is sending the dollar higher, making industrial metals more expensive for buyers holding other currencies. Copper fell below $4,500 a metric ton for the first time in six years and nickel touched the lowest in more than a decade. U.S. crude rose back above $42 per barrel after Saudi Arabia pledged to help stabilize markets.
“Wild gyrations in oil and another copper tumble could see further pressure on resource stocks,” said Michael McCarthy, chief markets strategist in Sydney at CMC Markets. “The rhetoric from the Fed suggests numbers would have to fall off a cliff to stop an interest-rate rise in December.”
Australia’s S&P/ASX 200 Index slipped 0.4 percent. BHP Billiton fell 1.7 percent in Sydney, the biggest drag on the regional benchmark gauge. Rio Tinto Group lost 1.1 percent.
Regional Gauges
Japan’s Topix index slipped 0.2 percent. New Zealand’s S&P/NZX 50 Index added 0.3 percent. South Korea’s Kospi index was little changed.
Markets in Hong Kong and China have yet to open. Futures on the Hang Seng Index added 0.2 percent in most recent trading, as did contracts on the FTSE China A50 Index. The Shanghai Composite Index fell 0.6 percent on Monday on a slump in technology companies as the securities regulator gave the green light to initial public offerings following a five-month freeze.
E-mini futures on the Standard & Poor’s 500 Index were little changed. The underlying gauge slipped 0.1 percent Monday as gains in consumer companies were overshadowed by a retreat in Allergan Plc and Pfizer Inc. amid their record $160 billion merger. [Bloomberg]
FTSE Outlook and Prediction
Certainly quite choppy at the moment and a bit directionless. The bulls failed to break the daily pivot yesterday at the 6328 area, and today the daily pivot is resistance at 6295. If the bulls are able to break through this level then a rise to 6320, and possibly 6345 looks doable, though there is a decent downtrending channel on the 10min and 30min charts at the moment. Key support on the 30min chart is at 6280, if the bears break through this (its possible as this would be the third test of the rising support line on the 30min chart) then a decline to 6220 looks possible. So, its in a pretty narrow range as I am writing this of just 15 points between decent support and resistance. I think a short off the pivot at 6295 is worth a try initially, though be easy to flip to long of the bull looks to be pushing through this level.