Good morning. Well that was right to be bullish yesterday but it turned into one of those annoying trending days where it didn’t pull back to a decent long entry and it felt too risky to just hop on the rise. Unfortunately the pivot at 6682 got hit before I sent the email so that order never got a change to take. However, despite hitting the 6760 area, the bulls have been dragged back down, and the ASX has been bearish during their Thursday session – so we may be back below 6700 today. Today is “Super Thursday” – The Bank of England’s Monetary Policy Committee will release its August interest-rate decision, minutes of the policy meeting and new economic forecasts at noon in London. Governor Mark Carney will will hold a press conference at 12:45 p.m. That’s part of a new communications format under Carney and comes against a backdrop of accelerating wage growth and the longest streak of continued economic expansion since before the recession in 2008. Carney set the tone for the event by saying last month the time for tighter policy was approaching.
US & Asia Overnight from Bloomberg
Asian stocks rose, following a rebound in global shares, amid optimism over the American economy. Japanese equities climbed as the yen weakened.
The MSCI Asia Pacific Index gained 0.4 percent to 141.64 as of 9:02 a.m. in Tokyo. The Standard & Poor’s 500 Index advanced 0.3 percent on Wednesday as data showed the fastest pace of U.S. service-sector growth in a decade. Japan’s Topix index added 0.9 percent as the yen traded at 124.80 per dollar after three days of declines.
Traders are bolstering bets the Federal Reserve will raise interest rates before the year is out as the economy appears firmly in recovery mode. Interest-rate futures showed the chances of a Federal Reserve rate increase next month reached 48 percent Thursday, up from 38 percent earlier this week.
“A September rate hike from the Federal Reserve seems to be the consensus among market participants,” said Chris Weston, Melbourne-based chief market strategist at IG Ltd. This “is the first time the market has swung to having September as its base case. It is now clear the Fed’s tolerance of low wages has increased and we’re not going to need to see a dramatic improvement in wage trends before raising the funds rate. This makes the unemployment rate data print the most important aspect in this Friday’s payrolls.”
Australia’s S&P/ASX 200 Index was little changed, while New Zealand’s NZX 50 Index rose 0.2 percent. South Korea’s Kospi index advanced 0.4 percent.
Hong Kong-traded stocks are poised to gain, with futures on the Hang Seng Index climbing 0.5 percent and contracts on the Hang Seng China Enterprises Index, which tracks mainland shares listed in the city, rising 0.4 percent. FTSE China A50 Index futures advanced 0.1 percent in Singapore, while those on the Shanghai Shenzhen CSI 300 Index dropped 1.6 percent.
Chinese stocks traded in the U.S. rose a second day Wednesday, with the Bloomberg China-US Equity Index up 1 percent. The Shanghai Composite Index lost 1.7 percent on Wednesday after changing direction more than 10 times. Volumes on the index are falling amid concern government intervention designed to prevent another stock rout is driving away investors. [Ref]
FTSE Outlook
Today is billed as Super Thursday when we have a load of news out from the BoE, so things might be a little choppy around midday. Mark Carney is also holding a press conference after that. I am feeling a little bit more bearish today than I was yesterday, partly driven by the fact that the bulls haven’t really held onto those gains that well, even helped by a 10 point divi yesterday. The 30min EMAs have crossed over to bear for the moment,, while the 10 min is on a weak bull. As such I expect that we may well see a dip back to the 6680 area, where we have the daily EMAs, the S1 level, and then the bottom of the 10 day Raff at 6663. Todays pivot is 6721 – a little bit too close to the 6710 support to be strong resistance I think, though looking at the 10min a short from the top of that rising channel at 6735 looks like its worth a go. If the bulls break through the 6735 area then the next areas of resistance are 6765 and then 6800, where we have the top of the rising 30min channel, and then we start nearing the top of the Bianca channels at 6820. I think the FTSE might be a bit more cautious today after yesterdays rise.