Good morning. Bullish end to the quarter yesterday and those 2 shorts both got stopped out, even managing to break the top of the 10 day down channel. Beginning of the new month will see some new funds flowing ion this morning so expecting a bit of upside from that and we are still testing the top of the daily channels – both the Raffs are around this 6150 area. If the market isn’t too careful its going to rise too far too fast, get overbought and then come back down sharpish! Probably after NFP tomorrow….
US & Asia Overnight from Bloomberg
Asian stocks followed U.S. shares higher, after the regional benchmark index posted its worst quarter since 2011, as investors awaited Chinese factory data.
The MSCI Asia Pacific Index advanced 0.2 percent to 124.09 as of 9:01 a.m. in Tokyo. The gauge slumped 15 percent in the three months ended September. The Standard & Poor’s 500 Index rose 1.9 percent in New York Wednesday, its best rally in three weeks, paring its quarterly drop to 6.9 percent.
With almost $11 trillion erased from global shares in the past three months, investors turn to Thursday’s Chinese manufacturing reports for clues on the extent of the slowdown in the world’s second-largest economy. Riskier markets have been sold amid decelerating growth in China, a prolonged commodity slump and an exodus from developing-nation assets as the U.S. prepares to raise interest rates as soon as this year. With a week-long holiday in China from Thursday, money managers will then assess Friday’s U.S. payrolls report for indications on whether the job market is strong enough to withstand tightening.
“You shouldn’t be surprised if October is at least as volatile as September,” said Don Williams, Sydney-based fund manager at Platypus Asset Management Ltd. “The environment is still tough and earnings growth is hard to come by.”
China PMI
China’s statistics bureau is scheduled to release an official manufacturing index for September on Thursday. The reading will probably be 49.7, unchanged from a month earlier, according to the median estimate of economists surveyed by Bloomberg. A reading below 50 indicates contraction. Recent data have been weak, with a preliminary reading of a private factory gauge falling to the lowest level since the global financial crisis and industrial profits slumping the most in at least four years.
Japan’s Topix index gained 0.7 percent. The Tankan index of sentiment among large manufacturers fell to 12 in the third quarter, from 15 in the previous three months, the Bank of Japan said. Economists had expected a reading of 13. Big companies across all industries plan to boost capital expenditure by 10.9 percent this fiscal year, more than the median economist estimate of 8.7 percent.
Australia’s S&P/ASX 200 Index rose 0.2 percent and New Zealand’s NZX 50 Index slipped 0.3 percent. South Korea’s Kospi index lost 0.2 percent.
E-mini futures on the S&P 500 fell 0.3 percent. [Bloomberg]
FTSE Outlook
Could be an interesting day today, especially going into NFP tomorrow and with ISM Manufacturing today in the US. We have popped above the 10 day Bianca channel overnight at 6097, however, both the 10 and 20 day Raff channels are around the 6150 area, so we may well get a dip from this area. The daily pivot is down at 6021 for today so support there, with 5990 below that. As you can see from the chart below there is a fairly decent looking 10 minute (rising) channel in play, with support around the monthly pivot area at 6078. I don’t think we will get as low as the pivot today, with the 6078 area holding for support, but if it breaks then its more likely. At the moment the various moving averages are all bullish so the bias is still long, and the Dax is just popping above its daily Raff channels too, after these big overnight rises, so a bit of a gap close start might well be likely.