Good morning. I hope you had a good weekend. The US markets are closed today for Labor Day and that normally means that the FTSE volatility is less. However, with the way its been the past few weeks that might not be the case today! Am looking at early support at 6071 so if that holds then we could well get a push up today and I think we might have a bullish week ahead. Just a hunch really as the 10 day Bianca channel is turned upwards with the 6000 support level holding for the past few sessions, so a rise towards 6333 initially could be on the cards.
US & Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index heading for its lowest close since November 2012, as a stronger yen weighed on shares in Tokyo and investors awaited the resumption of trading in China following a holiday.
The MSCI Asia Pacific Index dropped 0.5 percent to 124.17 as of 9:01 a.m. in Tokyo. The gauge slumped 4.8 percent last week, capping its seventh weekly decline, as a contraction in Chinese manufacturing reinforced investor concern about the world’s second-biggest economy. The Standard & Poor’s 500 Index fell 1.5 percent on Friday after August payrolls data failed to provide clarity on the interest-rate outlook.
“The key focus this week would be China as the market reopens, with investors looking out for data on exports and inflation that are due this week,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “Investors are increasingly concerned about the slowdown in the Chinese economy. There’s a lot of potential market-moving news in the next two weeks, including the possibility of a U.S. interest rate-hike this month. It might be time for investors to keep their seat belts on.”
China worked to soothe concern over its economy at the Group of 20 gathering in Turkey at the weekend, with officials predicting stabilization in the currency and stock markets in the coming weeks. People’s Bank of China Governor Zhou Xiaochuan said in a statement that the rout in Chinese equities is close to ending, and that state intervention prevented systemic risk and stopped a free-fall.
Fed Bets
Friday’s U.S. payrolls report showed that while wages and the number of hours worked increased last month, the economy added fewer workers than expected, leaving bets on a rate hike in September around 30 percent. International Monetary Fund chief Christine Lagarde emphasized that the Federal Reserve must be certain the U.S. can handle higher rates given the impact monetary tightening will have on the global economy.
Japan’s Topix index lost 0.7 percent after the yen strengthened for a third straight week. South Korea’s Kospi index fell 0.2 percent, as did Australia’s S&P/ASX 200 Index. New Zealand’s NZX 50 Index added 0.1 percent. Markets in China and Hong Kong have yet to open.
The Shanghai Composite Index dropped 2.2 percent in last week’s shortened trading, with mainland markets closed on Thursday and Friday. China releases trade data on Tuesday and inflation numbers on Sept. 10.
E-mini futures on the S&P 500 gained 0.2 percent Monday. U.S. markets are closed Monday for a public holiday. [Bloomberg]
FTSE Outlook
Initial support is at 6071 where we have the daily pivot and also the 25ema on the 30min chart following a cross of the EMAs to bull. If that holds I am thinking that we will get a pop up towards the 6110 area where we have the 200ema as resistance, and the level we have dropped off from overnight. That then fits with the 10min declining chanel which has support at 6020ish and the 30min channel there too, so could be a level that is worth a long. Its also just above Fridays after hours low. At the moment I don’t fell too pessimistic about the week ahead, though I think the bulls will be a little bit wary still while the uncertainty over interest rate rises remains.I still don’t think the US will raise them this month, but you never know! So for today I am thinking weak bulls, especially if we decline to the 6020 area which could be good for a bounce. The bulls will need to break 6110 today, if we are to push higher this week.