Good morning. Well here we are, ECB announcement day. Was yesterdays news of 50bn Euro a month a leak, just testing the water to see the reaction, or a move to pump it higher so if it drops, it drops from higher up? So cynical! It certainly got the bulls in a frenzy anyway, with a rise through 6700 and an overnight high of 6740. The ECB all kicks off with the rate decision at 12:45, then Draghi’s press conference at 13:30. Prices likely to be jumpy around that time! We could get a rise this morning the top of the 10 day Bianca around 6772, and both the Raffs are heading upwards now, with the strength this week. Support is at the pivot initially, 6692.
Asia Overnight from Bloomberg
Asian stocks fell even amid speculation the European Central Bank will boost stimulus through a sovereign-bond purchase program under the quantitative-easing strategy.
The MSCI Asia Pacific Index (MXAP) lost 0.1 percent to 134.46 as of 9:05 a.m. in Tokyobefore markets open in China and Hong Kong. An ECB Executive Board proposal calls for as much as $1.3 trillion in asset purchases through the end of 2016, according to two euro-area central-bank officials who have seen the document. The Standard & Poor’s 500 Index added 0.5 percent and the Stoxx Europe 600 Index advanced 0.6 percent to extend a seven-year high yesterday.
“I’m not convinced that even a 1 trillion euro package will be enough to save the euro area,” said Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which has about $21 billion in funds under management. “It may be the case that this process has dragged on so long it’s mostly factored into financial market prices.”
Japan’s Topix index slid 0.1 percent. Australia’s S&P/ASX 200 Index advanced 0.5 percent and South Korea’s Kospi index added 0.4 percent. New Zealand’s NZX 50 Index added 0.2 percent after yesterday closing at a record high.
The ECB proposal could still be changed significantly, the people said, asking not to be identified as it is confidential. Purchases won’t start before March 1, one of the people said. The central bank will announce its policy decision today.
China Rebound
China’s Shanghai Composite Index jumped 4.7 percent yesterday, the biggest advance since October 2009. The gauge plunged by the most in six years on Monday as the nation’s biggest brokerages were suspended from adding margin-trading accounts.
China’s world-beating stock rally is over, according to the latest Bloomberg Global Poll. Some 58 percent of the survey’s 481 respondents said the Shanghai Composite Index (SHCOMP) will either decline or remain little changed over the next six months after a 55 percent advance since June. China’s economic growth slowed to its weakest pace in 24 years and a real-estate developer’s failure to meet an interest payment is raising the specter of a pickup in debt defaults.
Futures on the S&P 500 were little changed after the underlying measure advanced for a third day yesterday. Profit at S&P 500 companies probably climbed 0.8 percent in the final three months of 2014, analysts predicted, down from an October estimate of 8.1 percent. [Ref]
FTSE Outlook
Tricky one to call today really as its going to be so news focussed. Support is at the pivot 6695 and there is the bottom of the 30 minute channel at 6680ish. On the upside, we have the 10 day Bianca channel top at 6772 so may see a bit of profit taking on long there if its hit prior to the ECB news. They could announce anything really, so sometimes its best to keep your powder dry. I have plotted the arrows for a dip off that 30min channel around 6755, down towards the pivot and then another round of buying. I am 50% confident in todays arrows just so you know! I will try a long at the pivot area 6695 stop 6680 and see what happens. That said, we have some PRT resistance on the daily around 6750, and the rsi(10) is at 70 so a little overbought at the moment – they might well want to slow this rise down a bit, so support below the pivot is at 6655 and 6635. 6600 for a bit of round number support.