Good morning. China continues to be weak and weigh on the markets, with another bearish session on Wednesday. Today we have a 5 point divi and also the Fed releases their minutes later today, which will give a clue if a rate hike is coming in September. The FTSE has dropped a bit of course, though a few were expecting 6400 early in August and that hasn’t come as yet. As such the FTSE is holding up quite well really, and the S&P is still around 2100. So though it feels bearish its a slow drift down rather than a violent move, which given China dropped 6% at their close yesterday is quite good for the bulls. That said they can’t seem to make any of the rallies stick at the moment. We closed the first of the share screener stocks yesterday – Easyjet closed for +80 having bought on 31st July so a nice rise on that. More info on the share screener service can be found here
US & Asia Overnight from Bloomberg
Asian stocks fell a fourth day as a deepening commodities selloff raised concern growth may be slowing in China, and as investors await clues from the Federal Reserve on the timing of a U.S. interest-rate increase.
The MSCI Asia-Pacific Index dropped 0.1 percent to 136.83 as of 9:01 a.m. in Tokyo, extending a seven-month low. Crude oil resumed losses and copper dropped to the lowest since 2009 as concern mounted that slower growth in China will erode demand for raw materials. Minutes of the Federal Reserve’s last meeting will come under scrutiny Wednesday, with market expectations for a September rate hike falling to about 48 percent from around 50 percent last week.
“There’s a flow-on effect of the issues given concerns over the Chinese economic slowdown,” James Lindsay, who helps manage the equivalent of about $3 billion in assets at Nikko Asset Management NZ Ltd. in Auckland, said by phone. “The consensus is the Fed will raise rates in September, but there’s a potential for that to be pushed out amid increased market volatility.”
Japan’s Topix index fell 0.4 percent. South Korea’s Kospi index rose 0.1 percent. Australia’s S&P/ASX 200 Index gained 0.1 percent. New Zealand’s NZX 50 Index climbed 0.2 percent. Markets in China and Hong Kong have yet to open.
The Bloomberg Commodity Index fell on Tuesday to the lowest level since February 2002. The gauge of 22 raw materials declined for a sixth day in the longest run of losses in more than a year. With China the world’s biggest consumer of industrial metals, Tuesday’s 6.2 percent slump in the Shanghai Composite Index rattled raw-material investors.
Chinese investors are cutting expectations for stimulus after data showed a stronger housing market and the central bank injected cash into the financial system. The securities regulator said Friday that China Securities Finance Corp., the state agency tasked with supporting share prices, will reduce buying as volatility falls.
Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent. The underlying measure slid 0.3 percent on Tuesday. [Ref]
FTSE Outlook
Looking at the 10min chart to start the day there is resistance at 6522, and if we drop from here then there is a decent looking 30minute channel in play. At 6am we have bounced off yesterdays low around the 6504 level and also near the lower fib 1 level. If the bears do have a go this morning first thing then 6488 looks decent initial support, though the daily channels are all a bit lower than that, at 6464 and 6436. If the bulls break 6522 on this current bounce as I am writing this, then the daily pivot at 6535.8 is a likely target for this rise from 6504. Above that the the 200ema at 6560ish is the next resistance. Divi is fairly small today at 5 points, so not likely to generate much divi hunter buying towards the bell, maybe just a small climb. Mostly its eyes on the Fed minutes today for clues as to rate hikes in September or not. I’m just looking at trading that 30min channel really.