Good morning. Pretty bullish day yesterday, not dipping down to the 6130 support area in the end but just trending up and breaking the top of the 10 day Bianca also. Today has resistance from that daily channel at 6284. A bit of buy the rumour going on in advance of the Fed decision this evening (7pm) and market is assuming that no rate rises looking at the price rises since that 6020 low on Monday. I am still feeling that we get 6400 before the next leg down, though a lot will depend on this evenings outcome.
US & Asia Overnight from Bloomberg
Asian stocks rose on the final stretch of the countdown to the Federal Reserve’s policy decision as material shares led gains.
The MSCI Asia Pacific Index increased 0.5 percent to 129.12 as of 9:02 a.m. in Tokyo, advancing for a second day. BHP Billiton Ltd. was the biggest boost to the measure, adding 2.7 percent in Sydney after metals and oil prices climbed. While investors remain confident the U.S. central bank will raise borrowing costs this year, traders are pricing in a 28 percent chance of action on Thursday.
“Most investors agree the U.S. will have to raise rates this year, the only question is when,” Michael McCarthy, chief market strategist in Sydney at CMC Markets, said by phone. “The sooner the Fed normalizes interest rates the better. The U.S. economy is recovering. Central bank policies in Japan and China remain accommodative even after the Fed starts lifting rates.”
Japan’s Topix index added 1 percent. Standard & Poor’s cut Japan’s long-term credit rating one level to A+ on Wednesday, saying it sees little chance of Prime Minister Shinzo Abe’s strategy turning around the poor outlook for economic growth and inflation over the next few years.
South Korea’s Kospi index advanced 0.3 percent. Australia’s S&P/ASX 200 Index increased 0.6 percent, as did New Zealand’s S&P/NZX 50 Index. Markets in Hong Kong and China have yet to start trading.
Chinese equities surged in the last hour of trading on Wednesday, with the Shanghai Composite Index jumping 4.9 percent, a pattern that’s become associated with state support. Futures on the FTSE China A50 Index in Singapore rose 0.9 percent in most recent trading. Contracts on the Hang Seng China Enterprises Index, which tracks mainland equities listed in Hong Kong, climbed 1.4 percent.
E-mini futures on the Standard & Poor’s 500 Index slipped 0.2 percent. The underlying U.S. equity benchmark gauge advanced 0.9 percent on Wednesday. [Bloomberg]
FTSE Outlook
I am thinking that we will see some more buying today, certainly up to the top of the 10 day Bianca channel at 6284 initially. As we get nearer to the interest rate decision we may well see some of the profits being banked from those that have driven that up with the buy the rumour over the past 2 days. There is an argument for rates to rise of course as the US economy is doing ok, but if they do then obviously that is felt globally. Its going to be interesting to see what they do, thats for sure. Watching the news this morning they seem to think that rates will rise, with the UK following in 6 months or so. For today we have the daily pivot at 6228, with the monthly pivot just above that at 6245. I think this monthly pivot will hold this morning for a rise towards 6300 as we approach the announcement. R1 is at 6305, and the top of the 10 min channel is around that area as well so this area might see some bears and profit banking.