Good morning. Bulls seem to have a found a bit of strength overnight following the Fed yesterday (and decent Chinese data), and those short levels yesterday were only good for a few points. Seems that the bears were not able to hold the price below 6800, though interestingly with all that bearishness earlier in the week, this rise is now not far off the top of the 10 day Raff channels on Dax, S&P and FTSE (9768, 1897, 6874 respectively). Wonder if there are a lot of bears suddenly starting to look a bit trapped?
Asia Overnight from Bloomberg
Asian stocks rose for the first time in five days after Federal Reserve meeting minutes showed policy makers see a muted risk of inflation from continued U.S. stimulus and a Chinese manufacturing gauge topped estimates.
The MSCI Asia Pacific index advanced 1.2 percent to 140.41 as of 11:41 a.m. in Hong Kong, with six stocks rising for each that declined. The measure fell 1.3 percent over the past four days amid concern about China’s growth outlook and after valuations last week climbed to a six-week high. Shares extended gains today after data showed a private index of Chinese manufacturing rose to five-month high in May, suggesting the region’s biggest economy is stabilizing after government moves to counter a slowdown.
“We’re certainly not back on what you’d call a brilliant footing with the economy, but we are seeing a change for the better,” Evan Lucas, a Melbourne-based market strategist at IG Markets Ltd., said by phone. “It’s a positive sign.”
Regional Gauges
Hong Kong’s Hang Seng Index gained 0.8 percent and the Hang Seng China Enterprises Index of mainland Chinese equities listed in the city jumped 1.5 percent. The Shanghai Composite Index rose 0.4 percent.
Japan’s Topix index gained 1.4 percent and South Korea’s Kospi index rose 0.6 percent. New Zealand’s NZX 50 Index advanced 0.4 percent. Taiwan’s Taiex Index gained 1 percent and Singapore’s Straits Times Index added 0.2 percent.
Australia’s S&P/ASX 200 Index added 1.1 percent. James Hardie Industries Plc (JHX) rose 3.7 percent to A$14.19 in Sydney after the maker of building materials said it will buy back shares and increase spending on projects.
The China manufacturing purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April and beating economists’ estimates. Readings below 50 indicate contraction. China is the world’s biggest exporter and the No. 1 consumer of industrial metals.
Russia signed a $400 billion deal to supply natural gas to China after more than a decade of negotiations. The accord between the world’s largest energy exporter and the biggest consumer will allow state-run gas producer Gazprom to invest $55 billion developing fields in eastern Siberia and building a new pipeline, Russian President Vladimir Putin said.
Fed Minutes
Fed officials are monitoring progress toward the goal of full employment in the U.S. as they consider the timing of the first interest-rate increase since 2006. The minutes also showed policy makers agreed that “early communication” of their exit strategy on stimulus and interest rates “would enhance the clarity and credibility of monetary policy.”
The central bank said last month the U.S. economy is showing signs of picking up and the job market is improving. It pared its monthly asset buying to $45 billion, the fourth straight $10 billion cut, and said further reductions in measured steps are likely. The Fed reiterated in the minutes that it will keep the key interest rate target near zero for a “considerable time” once it concludes the bond program.
S&P Futures
Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The U.S. equities benchmark climbed 0.8 percent yesterday.
FTSE Outlook
Well that bearishness was short lived with the bears failing to keep the price below 6800 for very long. 6780 support held yesterday, though with that bearishness it has dropped the top of the daily channel down to 6875 – both eh 10 day raff and Bianca are at this level. Good place for a short! If it breaks then 6919 looks feasible, however unlikely considering we were at 6780 yesterday! Initial shorter term resistance for today is 6858.
Looking at the 30 minute chart we have had a bit of a breakout of the PRT channel overnight, so with resistance at 6830, we may well dip back to test the top of that channel before climbing higher later in the day.