Good morning. Well the long off the 6836 pivot yesterday held remarkably well and we got a steady rise all day. Well done those that held it all the way to 6900 or more. As expected the Budget was the usual sort of pre-election one, albeit fairly safe. Of course the big news that got everything really fired up was the Fed later in the day. US Indices soared following following the Fed announcement that it plans to raise rates sometime soon, vague enough, but at a slower pace than previously forecast…The ‘patient’ word was dropped from the statement (though Yellen did then say that doesn’t mean they are ‘impatient’) which sent the SPX from 2061 pre-announcement to 2108 at it’s high! The FTSE rallied hard to 6986 whilst the DAX continued it’s slump to as low as 11,812.
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks rose, heading for a six-month high, after the Federal Reserve said data suggest U.S. economic growth has moderated and officials indicated interest rates will rise at a slower pace than previously forecast.
The MSCI Asia Pacific Index gained 1 percent to 147.39 as of 9:00 a.m. in Tokyo, on course to close at the highest level since Sept. 9. U.S. stocks and bonds jumped Wednesday as the Fed lowered its estimate for where the federal funds rate will be by the end of 2015 to 0.625 percent, versus a December forecast of 1.125 percent. In a new set of quarterly projections, policy makers cut forecasts for economic growth and inflation.
“This is a very important development as it means that the Fed believes that the recent buoyancy in the U.S. labor market has not yet reached a level that warrants a rate hike,” said Matthew Sherwood, head of investment markets research in Sydney at Perpetual Ltd., which manages about $21 billion. “The statement, I think, severely reduced the odds of a June rate hike expected by the market.”
Australia’s S&P/ASX 200 Index rose 1.3 percent. New Zealand’s NZX 50 Index climbed 0.2 percent as data showed its economy grew at its fastest pace since 2007 last quarter from a year earlier. South Korea’s Kospi index added 0.9 percent. Japan’s Topix index slid 0.1 percent after the yen jumped on Wednesday.
Fed-funds futures showed a 41 percent chance the central bank will raise its benchmark rate to at least 0.5 percent by September, according to data compiled by Bloomberg. Prior to Wednesday’s policy statement, the odds were 55 percent.
Yellen is preparing for an exit from the most aggressive easing in the Fed’s 100-year history. The central bank is trying to reconcile a strong labor market with falling inflation as it moves closer to lifting borrowing costs this year.
China Futures
Futures on the FTSE China A50 Index slipped 0.2 percent. Chinese shares on Wednesday rose to the highest level since May 2008 amid near-record turnover on speculation the government will do more to bolster growth. The Shanghai Composite Index has risen 77 percent over the past 12 months. Markets in China and Hong Kong are yet to open.
E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent after the underlying gauge surged 1.2 percent on Wednesday. [Ref]
FTSE Trading Outlook
Well all that bull led to a breakout of the daily channels. The top of the 10 day Bianca for initial resistance today is 6977, and support from the IG pivot at 6924. After that exuberance yesterday and a bit more clarification on the future of interest rate rises int eh US i expect a bit of a steady day today – a consolidation if you will, with maybe a dip to test that pivot area before more rises later/tomorrow. I think it will try for 7000 tomorrow, but may struggle a bit today as some profit is taken, so resistance above that 10 day channel is 6998. Readjusting the Raffs after that move puts the top of the 20 day at 6979 and the 10 day at 6993. If these break then 7050 and 7100, and then 7170(!) are the next resistance levels of note.
Support below the pivots (IG is 6924, live charts is 6909, the difference due to the larger out of hours move taken into account with the IG one) is 6890 and then 6860 – a break of this lower one would invalidate the upside potentials and a dip down to the bottom of the Biancas at 6660 would be possible.