Good morning. Those shorts all kicked in on FTSE, Dax and S&P first thing yesterday morning but after initially falling they felt like they didn’t want to drop too much further. Cutting and running (and banking) proved to be the right decision as the markets turned and stayed bullish for the rest of the day and into the evening, with the FTSE nearly reaching 6400 by the end of the US session. Somewhat surprisingly I must admit – there was more movement out of hours than during the session! The rise is mostly being fuelled by the thought that the Fed won’t be raising rates anytime soon and the China slow down seems to have been forgotten about – its always the same – just waves and cycles!
US & Asia Overnight from Bloomberg
Asian stocks followed U.S. shares higher, with the regional benchmark index heading for a third straight weekly advance, as technology and financial companies led gains.
The MSCI Asia Pacific Index added 0.4 percent to 134.53 as of 9:01 a.m. in Tokyo. The measure is heading for a 0.9 percent increase this week. Global equities resumed their October rebound, with U.S. stocks rising to an eight-week high amid bank earnings and mounting speculation the Federal Reserve will put off raising interest rates until 2016. Investors don’t see better-than-even odds of rates increasing until March next year, with a 30 percent chance of liftoff by December.
“The Fed probably won’t move rates yet and that could help support the share markets,” Tony Farnham, a Sydney-based strategist at Patersons Securities, said by phone. “While the global economy isn’t taking off as people would like it to, it’s not as if we’re falling into a deep abyss. There are some spots in the global economy that are not so dire.”
Japan’s Topix index climbed 0.8 percent. South Korea’s Kospi index added 0.2 percent. New Zealand’s S&P/NZX 50 Index rose 0.6 percent. Australia’s S&P/ASX 200 Index gained 1.1 percent. Markets in China and Hong Kong have yet to start trading.
The Shanghai Composite Index rose 2.3 percent to the highest close since Aug. 21 on Thursday as a government move to reorganize the telecom industry raised speculation policy makers will accelerate reforms of state-owned companies to stem slowing economic growth. FTSE China A50 Index futures climbed 1.2 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index slipped 0.1 percent in Hong Kong.
New Loans
China’s broadest measure of new credit exceeded estimates in September, suggesting the government’s efforts to boost lending are gaining traction. Aggregate financing rose to 1.3 trillion yuan ($205 billion), from an originally reported 1.08 trillion yuan in August, according to a report from the People’s Bank of China. That exceeded the median estimate for 1.2 trillion yuan in a survey of economists.
E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent. The underlying gauge jumped 1.5 percent on Thursday to its highest close since Aug. 20 as bank shares rebounded amid Citigroup Inc.’s better-than-estimated results. [Bloomberg]
FTSE Outlook
All set for a weird Friday? After that bullish from nowhere we will either follow that 10minute channel for a push higher towards 6430, or of the support are at a 6360 breaks then back down again. Initially I am thinking that the 10minute channel is worth trading of, so long at around the 6370 area if we get an initial dip, followed by shorts at around the 6440 area. We are now nicely back within the Bianca channels having broken below in recent sessions so the bulls have the momentum at the moment. The daily pivot is 6358, and we have the 30min coral at 6351, so the bulls will be keen to hold this area, otherwise a dip to 6307 looks likely. Sorry that sounds a bit vague, but its a tricky one to call after those rises last night – and as its Friday expect the unexpected. I trade with smaller stakes on a Friday as I often find it quite an odd day – the week being wrapped up and positions being adjusted as well as less trading going on means it sometimes seems a bit erratic! Anyway, I think that the bulls have managed to wrestle control from the bears that were shorting the dow at 17150, so we may well get a push a bit higher on that towards 17250 before a leg down. Still confident of year end rallies at the moment.