Good morning. European stocks posted their longest losing streak in three weeks as U.S. data and comments by Federal Reserve officials stoked concern of a rate increase. U.S. reports on capital-goods orders and new home sales in April, and consumer confidence in May all beat estimates. Fed Bank of Cleveland President Loretta Mester said yesterday the “time is near” for a U.S. rate increase, while Chair Janet Yellen indicated Friday that weak first-quarter growth won’t halt plans to raise borrowing costs this year. “We have Greece to worry about, just as concerns regarding a rate hike heat up in the U.S.,” said Francois Savary, chief investment officer at Reyl & Cie. in Geneva. “That’s all contributing to a slightly more cautious market in the past few days as investors reassess their investment scenarios.” Unfortunately it meant that my long got stopped out, fortunately for only a small loss, as it turned into quite a bearish day yesterday with the bulls failing to hold above 7000. The Dax was especially wild with a nearly 350 point range, not helped by the Greek debacle that continues.
US & Asia Overnight from Bloomberg
Asian stocks dropped, following a decline in U.S. equities, after better-than-estimated economic data bolstered the case for higher interest rates in the world’s largest economy.
The MSCI Asia Pacific Index lost 0.3 percent to 152.77 as of 9:01 a.m. in Tokyo. The Standard & Poor’s 500 Index sank 1 percent on Tuesday, its biggest slide since May 5, as strong readings for U.S. capital-goods orders and new home sales fueled bets for higher rates. Japan’s Topix index slipped 0.3 percent today even after the yen weakened 1.3 percent to an almost eight-year low against the dollar Tuesday. In Europe, talks between Greece and its creditors are said to be stalling.
“There is no doubt that with Greece on the verge of default, with political problems in other periphery countries, heightened valuations in all asset classes and constant global growth downgrades, investors have become increasingly short-term focused,” said Matthew Sherwood, Sydney-based head of investment strategy at Perpetual Ltd., which manages about $21 billion. “That is understandable and the limit of their vision appears to be the first Fed rate hike within the next six months.”
South Korea’s Kospi index fell 0.6 percent. Australia’s S&P/ASX 200 Index retreated 0.3 percent and New Zealand’s NZX 50 Index lost 0.4 percent.
Futures on the Hang Seng China Enterprises Index, a gauge of Chinese stocks listed in Hong Kong, added 0.4 percent in most recent trading, after the index climbed to its highest level since January 2008 on Tuesday. Contracts on the FTSE China A50 Index rose 0.3 percent, following a 2 percent surge in the Shanghai Composite Index for a sixth day of gains.
E-mini futures on the S&P 500 slid less than 0.1 percent today. [Ref]
FTSE Outlook and Prediction for spread betting
The daily chart is looking a bit bearish again now with the EMAs just crossing over to bear. With todays pivot initial resistance at 6980, and then EMA level at 6995, a short around this area looks a decent play to start things off. If the bulls were to break this area then the top of the Bianca channels at 7059 and 7076 are back in play, though it will take a lot to change the current sentiment, which is spooked over Greece and US interest rates. There is always something isn’t there! There is a bit of resistance at 7005 also, where we have the 200ema on the 30min – I expect this to be quite solid resistance if it got there. I am thinking a dip from the pivot for today, and we have support first up at 6941 and then 6924 which are both fib levels, with S1 at 6907 below them. S2 is at 6856, with the Bianca 20 day channel support slightly higher at 6878. With the S&P managing, just about, to hold above 2100, and the bottom of the 10 day Raff at 2098 for today, a lot will hinge on the US later. I think any dip will find support at the 6935 area initially where we have the bottom of the 10 day Raff (plus that fib at 6925)