Good morning. I am not sure what that rise was all about to 6245 yesterday at the open but it certainly worked in our favour with the long from 6108. After that rise the FTSE spent the rest of the day being bearish, dipping just below 6000 as the US session closed, with the Dow posting -500 at the time. However, as all the headlines started to ping up about it the bounce started and 100 was added quite quickly, with another 200 added overnight. The FTSE now sits at 6080. There was an interesting call from Morgan Stanley last night too who bravely called the bottom around the current moment in time, read more here. Time will tell if that comes to pass or not. Things look quite positive for a bullish start, if the bulls can hold 6060 support.
US & Asia Overnight from Bloomberg
Asian stocks fell, following a decline in U.S. shares, as weak American manufacturing data added to concern about a slowdown in global economic growth.
The MSCI Asia Pacific Index dropped 0.7 percent to 125.97 as of 9:02 a.m. in Tokyo. Anemic demand from emerging markets including China translated into leaner factory order books in the U.S., data showed Tuesday.
Futures on the FTSE China A50 Index slid 1.5 percent in most recent trading in Singapore, with contracts on the Hang Seng Index declining 0.7 percent.
“You have worries about the global growth outlook led by Chinese concerns at a time when the Fed is thinking about raising interest rates, and that’s leaving investors very twitchy,” said Shane Oliver, a Sydney-based global strategist at AMP Capital Investors Ltd. in Sydney, which oversees about $114 billion. “I think we’ve seen the worst, but it’s an environment where volatility is likely to continue.”
Japan’s Topix index declined 1.7 percent. South Korea’s Kospi index retreated 1.5 percent and New Zealand’s NZX 50 Index lost 1.3 percent. Australia’s S&P/ASX 200 Index fell ahead of a report on the nation’s economic growth. Markets are yet to open in Hong Kong and China.
In addition to the U.S. manufacturing report, an official factory gauge in China dropped to a three-year low in August, while measures for the euro area signaled a divergence in the German and French economies. An index for Germany expanded more than forecast and a French measure showed contraction, according to Markit Economics. U.K. manufacturing growth cooled as export orders declined for a fifth month. [Bloomberg]
FTSE Outlook
6060 looks a decent support level initially, as we have a bullish set up on the 30min chart with support there. This is the first time the 30min has been bullish this week so it will certainly be interesting to see if that level holds. We have had a decent overnight bounce from the 5980 low despite a bearish Asia and more weak data – though the flip side is of course rates won’t be rising in that case, hence this rise. If the bears break the 6060 support area then I would expect a dip back to 6000 area, and maybe lower they really start getting some momentum. The bottom of the daily channels are still quite far below at 5800 for the 10 day Raff and 5766 for the 20 day Bianca. Generally today I feel fairly positive, as long as that initial support holds.