Good morning. That was a busy start yesterday morning with the various short orders triggering on the Dax, Gold, S&P and FTSE and we did indeed get the dip first thing then the bouche back before the larger declines later on. Was a bit early with the second set of speculative shorts but well done if you held as they all came in well in the end! The big news for today is the ECB later, with the rate decision at 12:45 and the possibility of further stimulus announcements.Talking of the EU the latest one to kick off is Portugal whereby the Portuguese Left has torn up the script and demands the right to govern. Antonio Costa, Portugal’s Socialist leader and son of a Goan poet, has refused to go along with further pay cuts for public workers, or to submit tamely to a Right-wing coalition under the thumb of the now-departed EU-IMF ‘Troika’. Against all assumptions, he has suspended his party’s historic feud with Portugal’s Communists and combined in a triple alliance with the Left Bloc. The trio have demanded the right to govern the country, and together they have an absolute majority in the Portuguese parliament.
US & Asia Overnight from Bloomberg
Asian stocks fell from a two-month high, following a decline in U.S. equities, as material and health-care companies led losses. Investors awaited the opening of Chinese markets after yesterday’s slump.
The MSCI Asia Pacific Index slipped 0.3 percent to 134.17 as of 9:04 a.m. in Tokyo. The gauge surged to the highest since Aug. 19 on Wednesday, extending its October rally to 8.7 percent, as Japanese shares gained amid speculation the Bank of Japan will boost its stimulus program to stem weak economic growth.
“I’m finding it hard to get bullish especially after the run-up we’ve had,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, which manages about $7.2 billion, said by phone. “I see more risks than opportunities. I’m pretty cautious on China and the emerging world and there’s more to come there in terms of pain and volatility.”
Japan’s Topix index lost 0.5 percent. South Korea’s Kospi index fell 0.2 percent and New Zealand’s S&P/NZX 50 Index rose 0.1 percent. Australia’s S&P/ASX 200 Index retreated 0.5 percent.
Santos Ltd., an Australian oil and gas producer, surged 18 percent as it rejected a A$7.14 billion ($5.15 billion) takeover proposal from Scepter Partners, an advisory firm that manages assets for Middle Eastern royals. The offer represented a 26 percent premium to the company’s last close.
Markets in Hong Kong resume trading Thursday after a holiday, while India is closed. Futures on the FTSE China A50 Index rose 0.3 percent in most recent trading, following a 3.1 percent slide in Shanghai stocks last session. The biggest U.S. exchange-traded fund tracking Chinese equities slumped 4.6 percent Wednesday, the most in a month.
E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent after the underlying gauge retreated 0.6 percent on Wednesday. U.S. stocks declined after Valeant Pharmaceuticals International Inc. tumbled 19 percent, distracting investors from one of the busiest days for corporate earnings this season. [Bloomberg]
FTSE Outlook
We have bounced back from the 6300 tested yesterday evening and I think we will get a rise towards the top of the declining 30min channel at 6350 area before further downside. We have the daily pivot as initial resistance at the 6333 area, but looking at the 10minute there looks to be a chance that the bulls will pop above this first thing. The Dow managed to reach a high of 17315 yesterday, so still within that 17250/17350 area that I have been watching for a topping out before the next leg down. The bulls have held on pretty well really, as the bears have tried to drive it down from 17250 a couple of time but been fought back. This current drop is over 150 points though so should get a bit more momentum. It will be all eyes on the ECB announcement at 12:45 for rate cuts and any stimulus talk. If the bulls manage to break through the 6355 area then I expect we will see a test of the top o0f the 10 day Bianca channel at 6402. This will be a good area to short from.