Good morning. That was quite an opening spike first thing yesterday, relief that no major bank failed the stress tests really, before they realised that in fact 25 did still fail and that €25bn needs to come from somewhere! That saw a day of steady declines as the FTSE shed 100 points, before finding support at that lower area 6350. US data yesterday was mixed, while Twitter saw $3bn wiped off its value despite the company revealing it has attracted millions more users in the past three months. Shares in the social network dropped 10pc in after-hours trading, even though it reported 284m monthly active users at the end of the third quarter, up 13m on the previous three months and a rise of 23pc from the same period last year.
Bank of England policymaker Ian McCafferty has called for the Bank to begin raising interest rates now, warning that any spare capacity in Britain’s recovering economy could be used up by the middle of next year, which could lead to an increase in inflationary pressures. [From here]
Asia Overnight from Bloomberg
Asian stocks fell, following U.S. shares lower, after American data from home sales to manufacturing fell short of estimates and investors awaited a Federal Reserve decision on its stimulus program.
The MSCI Asia Pacific Index (MXAP) dropped 0.1 percent to 138.22 as of 9:02 a.m. in Tokyo, before markets opened in Hong Kong and China. The Fed will probably eliminate its remaining $15 billion in monthly bond-buying when it concludes a policy meeting tomorrow, and leave its key interest rate unchanged at a range of zero to 0.25 percent, according to surveys of economists conducted by Bloomberg.
“We are not sure that there will be a smooth handover from Fed QE to sustainable economic growth without financial market instability,” said Stewart Richardson, who helps oversee $100 million at RMG Wealth Management LLP in London. “We fear that recession risks, even in the U.S., are higher than most would care to admit because of weak overseas economies and potentially vulnerable financial markets with no QE to support them.”
Japan’s Topix index slid 0.1 percent as the yen slipped 0.1 percent to 107.87 per dollar after gaining 0.3 percent yesterday. Data showed retail sales beat estimates in the world’s third-largest economy. The Bank of Japan will consider moderating its language on inflation in a report this week to take account of the impact of lower oil prices, according to people familiar with the decisions.
Australia’s S&P/ASX 200 Index declined 0.2 percent. South Korea’s Kospi index added 0.2 percent. New Zealand’s NZX 50 Index sank 0.1 percent.
U.S. Data
Data yesterday indicated uneven economic growth in the U.S. Contracts to purchase previously owned homes rose less than forecast in September, showing housing will take time to gain momentum. Another release showed growth in services activity slowed this month, while the Dallas Fed’s gauge of regional manufacturing fell.
Futures on the Standard & Poor’s 500 Index were little changed after the gauge yesterday slipped 0.2 percent. U.S. energy producers declined after oil dipped below $80 a barrel, while telephone and consumer shares rose.
Hong Kong’s pro-democracy protesters will this evening mark a month since police used tear gas in a failed attempt to disperse them, as leaders debate whether to reopen discussions with the government. The pro-democracy protest is at an impasse after its leaders shelved a vote among participants on its direction over the weekend after televised talks between student leaders and the government failed to yield a solution. [From here]
FTSE Outlook
Todays pivot is 6381 so we have a bit of initial support here. I have put in an initial rise, to test the 6450/6460 area where we have the first batch of main resistance and the top of the 20 day Bianca, as well as the level we spiked to yesterday. However, the way it dropped off from here yesterday means that it probably needs to test the lower 6326 support area at some point soon as well. If we do get an inverted V shaped day today and drop off from the 6461 resistance then we could go as low as that today or tomorrow. Below 6336 support is 6316 then 6279 where we have the bottom of the 10 day Raff and and the 10 day Bianca.I would expect a bounce at 6316. I have gone for an initial rise as the 30min EMAs are positive at the moment, and we have an uptrending 10 and 30 minute channel. The 10min one has resistance at 6400 and support at 6386.
Support so entry levels for a possible long
- 6381 daily pivot
- 6336
- 6326
- 6316
- 6279
Resistance so entry levels for a possible short
- 6400
- 6449
- 6461
- 6495