Good morning. Hope you had a good weekend. Well the low on Friday was 6785 and the long order was….. 6785 so just missed with the spread, and the S&P 2085 level held well too. Bit annoying really as I have 6782 pencilled in as the support so thought that was a good enough entry. Doh! With Greece deferring and bundling their payments they should be out the news for a couple of weeks now, till we are back where we were last week at the end of June. Presuming (a little bit dangerous), those 2 levels are the short term lows we might be on for a bit of a bounce now, at least until interest rate rises are back as the hot topic. China was bullish overnight, with shares rising to the highest level in seven years in volatile trade as bets that MSCI Inc. will include mainland shares in its indexes overshadowed weaker shipments data.
US & Asia Overnight from Bloomberg
Asia’s benchmark stock index held at a two-month low after better-than-forecast U.S. employment data bolstered the case for the Federal Reserve to raise interest rates this year.
The MSCI Asia Pacific Index slipped less than 0.1 percent to 147.83 as of 9:03 a.m. in Tokyo. The measure slid 2.3 percent last week, closing Friday at the lowest since April 3. Bets in interest-rate futures showed the odds the Fed will boost borrowing costs in September rose to 33 percent on Friday after the best U.S. jobs report in five months, from 27 percent before the data.
“The market will continue to consolidate,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd. “There are a number of uncertainties out there, especially since equities have performed very well this year. If bond rates continue to increase, that will rock equity markets. Investors have to be prepared for a U.S. rate hike this year given that the U.S. economy has been doing pretty well.”
A gauge of global bonds erased its 2015 gains last week as signs of price growth in the euro area reignited a fixed-income selloff. Yields on 10-year Treasuries rose on Friday to the highest since October.
Japan’s Topix index added 0.3 percent. New Zealand’s NZX 50 Index was little changed. South Korea’s Kospi index fell 0.2 percent. Markets in Australia are closed for a holiday, while those in China and Hong Kong have yet to open.
The Shanghai Composite Index climbed 1.5 percent on Friday, capping a 8.9 percent advance last week, the most since December. Price swings are widening, with the Shanghai index’s 100-day volatility measure at the highest level in more than five years.
China Rally
Record growth in margin debt helped add more than $4 trillion to the value of mainland Chinese shares this year as the Shanghai Composite surged 55 percent. While bulls say gains are fueled by confidence President Xi Jinping will succeed in turning the nation from an export-led manufacturer into a consumer-spending powerhouse, bears point to valuations as evidence of a bubble.
E-mini futures on the Standard & Poor’s 500 Index were little changed Monday. The underlying equity measure dropped 0.1 percent on Friday, posting its second consecutive weekly retreat. [Ref]
FTSE Outlook
I feel slightly bullish for the start of this week as I expect the market will be glad to not hear about Greece and their financial woe for the time being. With that 6785 area on the FTSE and 2085 S&P holding well on Friday I think we might have formed a bottom there for the moment. Buy the dips could be back, at least till the end of June when Greece rears back up. For today we have the top of the 10 day Bianca at 6930 and I am expecting a rise to that level. Just above that we have the 25ema on the daily at 6946. With the pivot as support at 6819 and the bottom of the 20 day Bianca for today at 6816 I think this area is worth a long initially, for a rise to the 200ema and top of the 30min channel at 68708/6870 respectively. Above that 6892 is the PRT major horizontal resistance so the bulls will be keen to break that to text the 6930 level. Support wise, below the pivot we have 6804, then 6765 for the bottom of that 30min channel and an area that might well be worth a long if seen (not sure it will be though).The bottom of the 20 day Raff is also 6770.