Good morning. Pretty quiet in the end yesterday as the US was closed for Labor Day, not really a greta surprise. We got the rise initially to 6120 as expected but then it was just a slow drift down and hover around 6070 for the rest of the day. On a positive note the FTSE seems to be holding its support above 6000 at the moment so if there is some catalyst for a rise we could be in a good spot for that – maybe something like not raising interest rates?! We are just above the daily pivot as I write this at 6081 so we may get a rise today back above the 6100 area.
US & Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index climbing from its lowest close since 2012, as Japanese shares advanced and investors awaited trade data from China.
The MSCI Asia Pacific Index added 0.1 percent to 124.25 as of 9:07 a.m. in Tokyo. Japan’s Topix index gained 0.3 percent after a revised report showed gross domestic product shrank less than previously reported. While the Shanghai Composite Index lost 2.5 percent on Monday, traders took solace that the slump wasn’t deeper, driving European shares higher. Data Tuesday are expected to show further declines in Chinese exports and imports, potentially reinforcing concern over decelerating growth there and its impact on the global economy.
“While there are opportunities out there, there’s no rush to pick the bottom at this stage given prevailing uncertainties over the slowdown in the Chinese economy and the timing of the U.S. interest-rate increase,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “Investors probably want to sit tight and watch developments closely.”
South Korea’s Kospi index rose 0.4 percent. Australia’s S&P/ASX 200 Index added 0.3 percent, as did New Zealand’s NZX 50 Index. Markets in China and Hong Kong have yet to start trading.
Uncertainty over China’s outlook has stoked market volatility the past month, with the country’s surprise devaluation of the yuan Aug. 11 igniting a selloff in the riskiest investments. China’s foreign-exchange reserves fell by a record last month as the central bank sold dollars to support the yuan after the biggest devaluation in two decades spurred bets on continued weakness.
E-mini futures on the Standard & Poor’s 500 Index rose 0.9 percent from Friday’s close. U.S. markets reopen Tuesday after the Labor Day break.
Futures traders are pricing in a 30 percent likelihood of an increase in U.S. interest rates this month, with the Federal Reserve set to announce its next policy decision on Sept. 17. [Bloomberg]
FTSE Outlook
Could be an interesting day today with the US back from the holiday and the Nikkei having dropped 2.4% as I am writing this – though the FTSE Futures have stayed around the 6085 area. We are just above the pivot and there are some bullish looking charts for today, so I have gone with a dip and rise as the play for today. 6067/6077 looks to have fairly decent support, though if that breaks then a decline to 6028 is pretty likely, where we have the bottom of a rising 30min channel. Below that the bottom of the 10 day Bianca channel is 5955, and a break of 6000 would certainly spook the bulls. Its all eyes join the Fed really and a lot of the big money is probably keeping their powder dry waiting for a clearer signal rather than taking a punt at the moment. Generally for today I am expecting a rise towards yesterdays high at 6115, and possibly higher – I think we might even see nearer to 6187, especially if the US is buying mood after their break yesterday, where we have the top of the 10 day Raff and a major PRT resistance line. The big hurdle for the bulls to jump after that will be at the 6236 area currently, where we have the 25ema on the daily chart and likely to act as resistance.