Good morning. Thats 6380 short worked out well, nearly running all the way to the 6290 target in the end. Thought 6340 might have provided better support than it did on the way down though. The bulls fought back from 6300 to retest 6360, but overall the bears where in charge yesterday and could be for a few more sessions yet. We are around the 6290 area now, though I still think shorting the rallies is the best option for the short term. Yes terrace main UK news was that consumer prices slipped to their lowest level since April at -0.1pc on the back of falling energy costs and sluggish growth in clothes prices. But in more encouraging signs for the economy, core inflation – which strips out volatile elements such as energy and food – remained unchanged from August at 1.1pc. Economists now expect inflation to start bouncing back at the end of the year, as the commodity price fall stabilises.
US & Asia Overnight from Bloomberg
Asian stocks dropped for a second day, tracking a decline in U.S. equities, as investors awaited Chinese inflation data amid renewed concern about the slowdown in the world’s second-largest economy.
The MSCI Asia Pacific Index fell 0.4 percent to 132.35 as of 9:00 a.m. in Tokyo. Global equities snapped their longest rally since February on Tuesday and the Standard & Poor’s 500 Index fell from a seven-week high amid a plunge in Chinese imports. Investors will be watching Wednesday’s consumer and producer prices data to gauge how weakness in China’s economy will impact the global economic outlook.
“The cautionary element in the market is likely to continue,” Chris Green, an Auckland-based strategist at First NZ Capital Ltd., said by phone. “In terms of global growth the risk is skewed towards the downside. A softer read on the Chinese inflation data reinforces the backdrop of deflationary pressures and a softer growth profile globally. The Chinese economy is probably the largest risk that the global economy faces.”
Japan’s Topix index lost 0.8 percent. South Korea’s Kospi index slid 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.3 percent. New Zealand’s S&P/NZX 50 Index added 0.4 percent. Markets in China and Hong Kong have yet to start trading.
The Shanghai Composite Index gained 0.2 percent on Tuesday, after sliding as much as 1.1 percent, as investors weighed the prospects of stimulus measures after imports fell more than estimated. FTSE China A50 futures advanced 0.4 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index added 0.2 percent.
Chinese Inflation
Chinese consumer prices may have risen 1.8 percent in September from the previous year, according to a Bloomberg survey of economists and analysts, against a 2 percent increase in August. Producer prices may have dropped 5.9 percent, the same as the previous month, the survey showed.
E-mini futures on the S&P 500 were little changed. The underlying gauge declined 0.7 percent on Tuesday as industrial shares sank and selling picked up in biotechnology stocks.
Traders are now pricing in a 37 percent chance of a Federal Reserve interest-rate increase by December. [Bloomberg]
FTSE Outlook
I am thinking a similar pattern to yesterday with an initial rise to the resistance levels at the 6320 area, before more downside. The Dow failed to really break the 17150 level after that spike there on Monday night, and a move down to 16500 looks possible, which would take the FTSE with it. As such I am favouring shorting the rallies at the moment and we have a pretty decent declining channel on the 10 min chart at the moment. With the daily pivot at 6319, and the 30min coral as resistance at 6315 I think a short around this area is a good initial play. On the 2 hour chart there is resistance at 6375 which is worth a short but I don’t think the bulls are strong enough now to get there, but worth shorting if they did.