Good morning. Well Friday lived up to the usual pattern! NFP beat estimates by quite a margin showing an improving picture, which spooked the US markets as they wheeled out the fears over earlier interest rate rises again. Good news is bad again! That triggered a downturn in pretty much everything, as profits were taken and shorts entered. Initial support today is 6882, the bottom of the 10 day Bianca so I am thinking we may see an initial rise up to the pivot at 6928 before more downside this week. The US markets looked like they had run out of bull steam last week anyway and it was just the Europeans that were pushing up. Shame the FTSE didn’t manage to test that 6969 level we had pencilled in for the short on Friday though. I feel we are on for a bearish March so short the rallies is probably a good mindset. Since 1984 March has only had an average return of 0.5%, and only risen 5 times since 2001, with the last week typically being the weakest.
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks fell, following U.S. equities lower, as better-than-forecast U.S. jobs data fueled speculation the Federal Reserve will be faster in raising interest rates.
The MSCI Asia Pacific Index declined 0.3 percent to 144.98 as of 9:01 a.m. in Tokyo, with all 10 industry groups dropping. American employers added 295,000 workers last month, Labor Department data showed Friday in Washington, beating the median prediction in a Bloomberg survey of economists for a 235,000 increase. The unemployment rate fell to the lowest in almost seven years. The Standard & Poor’s 500 Index sank 1.4 percent, the most since January.
The jobs report “should play out in terms of further weakness in stock markets,” Richard Gibbs, Sydney-based head of economics at Macquarie Group Ltd., told Bloomberg TV. “Those expectations of normalization of interest rates were brought forward again. A lot is going to rest on what is said or is not said by Fed officials in the U.S. this week.”
Japan’s Topix index lost 0.7 percent as the nation’s revised fourth-quarter gross domestic product rose less than estimated. South Korea’s Kospi index retreated 0.5 percent and Australia’s S&P/ASX 200 Index fell 0.7 percent. New Zealand’s NZX 50 Index slipped 0.2 percent.
Futures on Hong Kong’s Hang Seng Index retreated 0.5 percent in most recent trading and contracts on the Hang Seng China Enterprises Index of mainland firms listed in the city lost 0.8 percent.
China’s exports grew steadily in the first two months of the year, driven by the U.S. economic recovery, while imports fell in a reflection of weakened domestic demand and lower commodity prices.
Exports gained more than 48 percent from a year earlier in February, beating analyst estimates for a 14 percent jump, though the number was skewed by distortions from the timing of the Lunar New Year holiday. Together with January, overseas sales rose 15 percent, surpassing the government’s goal for 2015 of 6 percent. [Ref]
FTSE Outlook
Todays pivot is 6928, (with the IG one at 6911), and support initially from the 10 day Bianca channel at 6882. As such I think may get an initial rise after Fridays falls, before more downside later today and over this week. I am bearish for the moment. On the daily FTSE chart, we have the 25ema also currently supporting proceedings, around 6883, and then below this the coral at 6848, which is also the bottom of the 50 day Bianca channel. Though I tend not to use the 50 day that much, preferring the 10 and 20 day. Anyway, main supports after the 6882 are 6864 (most recent low) with 6832 lower down. On the upside, resistance is mainly at 6928 though it will be interesting to see if 6911 gets a reaction too (IG pivot). Above 6928 would likely see 6950 though I would be surprised if it was bullish enough to push higher today as it feels like the worm has turned.