Good morning. Dipped form the 6245 down to 6215 for the shorts and long to play out though didn’t quite reach the 6285 short level before the bell. The FT100 had a powerful rally today on the back of expectations of further ECB stimulus and by Greece’s preliminary deal with its international lenders on home foreclosures. The only sector to miss out on the rally was commodities with some commodity prices falling to new lows, this in part due to expectations of a interest rate rise in the US in December and weak demand from China. In the short term it feels like the market is doing well but at the 6250 area this is really quite low and is far off the 6700 levels seen in August. Everyone seems to think there will be a “Santa Rally” and if enough people think it will happen then it probably will! – maybe 6500 would be a conservative target for year end.
US & Asia Overnight from Bloomberg
Asian stocks rose, boosted by gains in Japanese shares as the yen held losses before a Bank of Japan policy meeting. Investors awaited minutes from the Federal Reserve after U.S. inflation data bolstered the case for higher interest rates.
The MSCI Asia Pacific Index gained 0.3 percent to 132.26 as of 9:04 a.m. in Tokyo. Japan’s Topix index added 0.8 percent after the yen slid 0.2 percent against the dollar on Tuesday. The Standard & Poor’s 500 Index lost 0.1 percent on Tuesday as data showed consumer prices excluding food and fuel rose 0.2 percent in October, just as much as in September, and in line with economist forecasts. The Fed releases minutes from its last meeting Wednesday while the BOJ gives a policy statement on Thursday.
“The Fed minutes will definitely be focused on tonight,” said Ric Spooner, chief market analyst at CMC Markets Asia Pacific Pty Ltd. in Sydney. “There’s now an assumption that they are going to make a move in December. The bigger question now is whether they will be able to be as gently paced in their tightening as they plan to be as they monitor wage pressures.”
The MSCI Asia Pacific gauge rallied 8.9 percent through Tuesday from its September low, even as traders boosted the odds of a U.S. rate increase in December to 66 percent. As the BOJ begins its two-day meeting, all 41 economists surveyed by Bloomberg predict no change to already record stimulus despite a report Monday showing the economy slipped back into recession. Last month, 44 percent of economists said the BOJ would add to easing on Oct. 30.
South Korea’s Kospi index rose 0.2 percent. Australia’s S&P/ASX 200 Index lost 0.3 percent and New Zealand’s S&P/NZX 50 Index rose less than 0.1 percent.
Markets in Hong Kong and China have yet to open. Futures on the Hang Seng Index rose 0.5 percent in most recent trading, as did contracts on the FTSE China A50 Index of the mainland’s largest companies. The Shanghai Composite Index dropped 0.1 percent on Tuesday, erasing a gain of as much as 2 percent, as technology and small-company shares plunged on concern the resumption of initial public offerings will lure investors away from the nation’s priciest equities.
E-mini futures on the S&P 500 were little changed after the underlying equity gauge failed to add to a rebound from the worst week since August. Separate data Tuesday showed factory output increased in October for the first time in three months.
The Stoxx Europe 600 Index jumped 2.5 percent on Tuesday, the biggest rally in six weeks, as oil and gas producers including Total SA and Royal Dutch Shell Plc advanced. [Bloomberg]
FTSE Outlook and Prediction
We have the dividend today which is 6.4 so bear this in mind if you have a position open later on. There is some significant resistance at around the 6260 area for today, namely the 10 day Raff and a bit on the 30min chart. With the bulls failing to really break through the 6280 area last night I think we might see a bit of a dip down towards the 200ema and S1 area at 6220 this morning. There is still a bit of terrorist worry with 2 Air France planes diverted in the early hours and a shooting near Paris. All that said the 30min chart is still technically bullish though the EMAs look like they are shortly about to cross, which would play out for the drop towards 6220. There is also a rising channel on the 30min with support at 6240 so initial support there for any initial dip.