Good morning. Yesterday it appeared the markets would move higher in the morning and push up towards 6350 however after the FT100 opened it was soon clear things were turning negative. Once 6300 had been broken a couple of times to the downside then it was one way traffic until 6250 with the markets managing a minor rally near the close to 6275. It appears the main catalysts were fears of the Portugese banking system together with remaining fears of a US interest rate rise in December and therefore a stronger dollar. So the sectors to suffer most were commodities (which always seem to suffer on a strengthening dollar) and domestically supermarkets on ever decreasing margin worries. Some strength has appeared overnight with a retest of the 6300 area, and support forming at 6293 to start the day. Will we rise to the 10 day Bianca at 6354?
US & Asia Overnight from Bloomberg
Asian stocks fluctuated, with the regional benchmark index trading near the lowest since mid-October, as investors awaited a spate of Chinese data for clues on the extent of the slowdown in the world’s second-largest economy.
About the same number of shares gained and fell on the MSCI Asia Pacific Index, which added 0.1 percent to 132.87 as of 9:07 a.m. in Tokyo. The gauge closed at its lowest since Oct. 14 on Tuesday as slower-than-forecast inflation increased concern demand is weakening in the Chinese economy. Wednesday’s reports include data on retail sales, factory production and fixed-asset investment.
“China slowing is a trend,” Jack Ablin, Chicago-based chief investment officer at BMP Harris Bank, said on Bloomberg TV. Even if household spending replaces infrastructure investment, it has a smaller economic impact, he said. “That in itself is going lead to slowing so we’re going to have to reframe how the world views China.”
Japan’s Topix index was little changed and South Korea’s Kospi index fell 0.1 percent. New Zealand’s S&P NZX 50 Index added 0.2 percent, and Australia’s S&P/ASX 200 Index rose 0.3 percent. Markets in China and Hong Kong have yet to start trading, while those in Singapore and Malaysia reopen after Tuesday’s holiday.
Chinese shares in Hong Kong fell on Tuesday, with the Hang Seng China Enterprises Index sliding 1.8 percent. The mainland’s consumer-price index rose 1.3 percent in October, official data showed, compared with the 1.5 percent median estimate in a Bloomberg survey. The report was the latest to show monetary easing failing to arrest a deepening economic slowdown, after exports declined for a fourth month in October and factory gauges signaled the nation’s manufacturing still hasn’t bottomed out amid faltering global demand.
E-mini futures on the Standard & Poor’s 500 Index slid 0.1 percent. The underlying measure gained 0.2 percent on Tuesday as health-care and consumer shares rose after equities’ steepest decline in six weeks. [Bloomberg]
FTSE Outlook
We have the daily pivot at 6286 for today and I think we may see a bit of support here for a push towards 6354, the 10 day Bianca channel top area. As I write the moving averages are bullish on the 10 and 30 min, and if we do get a rise today then the 2 hour could change from bear to bull as well. That said, the daily chart is just turning bearish, with the 10ema moving below the 25ema, so unless the bulls break the 6355 area, I won’t be getting too excited that a year end rally is starting just yet. We also have a declining 30min channel with resistance at 6325 which could put the breaks on any rise first thing. Below the pivot sees support at 6275 and then 6255 area again, yesterday low area and also the bottom of that declining 30minute channel.