Good morning, I hope you had a good weekend. Fairly quiet on the news front over the weekend, though Friday evening saw that FTSE rally peter out at at the top of the 10 day Bianca level (6132 versus 6125 as the resistance) with a dip as the US closed to 6050. Has since bounced back to 6090 though. I expect the Labour conference this week will raise a few eyebrows with more controversial rhetoric (when in opposition you can pretty much say whatever you like it seems, without worrying about the finer details about how to pay for things!) Politics eh!
US & Asia Overnight from Bloomberg
Asian stocks fluctuated, with the regional benchmark index on course for its worst quarter in four years, as investors awaited data on Chinese industrial profits. Shares in Japan slid.
The MSCI Asia Pacific Index added less than 0.1 percent to 125.08 as of 9:04 a.m. in Tokyo after slipping as much as 0.1 percent. The regional gauge has slumped about 15 percent since the end of June, heading for its worst quarter since 2011, as the Federal Reserve prepares to raise interest rates with financial markets rattled by concern over the depth of China’s economic slowdown. Markets in Hong Kong, Taiwan and South Korea are closed for holidays Monday, while mainland China will be shut from Thursday for a week-long break.
“Everyone is super-sensitive to China at the moment,” Chris Weston, chief market strategist at IG Ltd., told Bloomberg TV. “I’m really specifically looking at U.S. data and how that drives implied probability around Fed pricing” for its first rate increase.
E-mini futures on the Standard & Poor’s 500 Index dropped 0.4 percent. A 2.7 percent slump in health-care stocks left the U.S. benchmark index down 0.1 percent on Friday.
U.S. House Speaker John Boehner will resign from Congress at the end of October, following clashes with conservative members of his Republican conference. For some traders, the move reduces the likelihood of a government shutdown as soon as October, while raising the specter of a stalemate later in 2015.
Regional Gauges
Japan’s Topix index lost 0.4 percent as more than 1,000 of its members traded without the right to receive the next dividend payment. Australia’s S&P/ASX 200 Index dropped 0.1 percent and New Zealand’s NZX 50 Index gained less than 0.1 percent.
Futures on the FTSE China A50 Index advanced 0.5 percent in Singapore, before the cash equity market opens. The Shanghai Composite Index sank 1.6 percent on Friday to end the week down 0.2 percent. [Bloomberg]
FTSE Outlook
The charts are looking alright for an initial rise this morning, with the moving averages on both the 10 and 30min in bullish mode. We have the daily pivot providing support at the 6067 level, with the 10min also showing that level as support. Below that 6055 looks favourable for a long entry on the 30min. If that sort of area holds then we might well get a rise towards the top of the 10 day Bianca at 6151, where we also have the top of the 10 day Raff. As such, the bulls might struggle a bit here, as a few longs will be getting backed here after the rise from 5950 I expect. I mentioned 6125 might be a good shorting area on Friday and it dropped off from there, the second touch of that channel at 6150 might well be worth a go today if seen. If we test the top of the 10 day channel again soon the third test might well break to the upside though. So, still cautiously bullish for the moment (though still don’t think we will see that 6400 in September after all). Don’t fall in love with the upside as they say, I still think we will see 5700 before long.