Good morning. A interesting day yesterday, and still choppy. Couple of the orders got stopped out though the 6847 short worked out ok in the afternoon. The bounce from 6800 had more strength once the 6812 was broken so there is still some bull power, with reinforcements arriving in the later afternoon when the latest poll showed the No vote in the lead. Its going to be like this next week as well. The S&P held that 1985 support area, so we should get back above 2000 soon – which will take the FTSE with it, probably to 6937 initially.
Asia Overnight from Bloomberg
Asian stocks rose, with the benchmark index heading for its first advance in six days, as Chinese shares rallied after weaker-than-expected inflation spurred speculation that the government will add stimulus.
The MSCI Asia Pacific Index (MXAP) added 0.1 percent to 146.92 as of 12:16 p.m. in Hong Kong after sliding less than 0.1 percent. The equity gauge declined 1.6 percent in the past five days as investors weighed the outlook for U.S. monetary policy ahead of the Federal Reserve’s meeting next week. China’s Shanghai Composite Index advanced 0.5 percent, heading for its highest close since March 6.
“We are still waiting for government measures from China as growth remains slow,” said Benjamin Tam, a Hong Kong-based portfolio manager who helps oversee about $1.5 billion at IG Investment Ltd. “People are speculating there could be more stimulus in the near term.”
Hong Kong’s Hang Seng Index added 0.1 percent, while the Hang Seng China Enterprises Index of mainland stocks traded in city was little changed. China’s nation’s consumer price index rose 2 percent last month from a year earlier, according to data released by the National Bureau of Statistics today. Economists surveyed by Bloomberg had expected a 2.2 percent gain. Factory-gate prices extended their decline to 30 months, adding room for government stimulus to support the economy amid a property slump.
Topix Rallies
Japan’s Topix index climbed 0.4 percent, extending a six-year high, as the yen traded near a 2008 low.
“The rally in Japanese equities will continue,” Desmond Chua, a strategist at CMC Markets in Singapore, said by phone. “The yen will continue to weaken as the dollar strengthens amid prospects of an interest-rate hike in the U.S.”
New Zealand’s NZX 50 Index climbed 0.4 percent after the central bank kept its benchmark interest rate unchanged. Singapore’s Straits Times Index added 0.3 percent. South Korea’s Kospi index slipped 0.1 percent as it resumed trading after this week’s holidays. Taiwan’s Taiex index was little changed.
Australia’s S&P/ASX 200 Index dropped 0.3 percent. The nation’s jobless rate fell to 6.1 percent in August from 6.4 percent a month earlier as employers added 121,000 jobs, a report showed.
The MSCI Asia Pacific Index traded at 13.6 times estimated earnings at the last close, compared with 16.7 for the Standard & Poor’s 500 Index and 15.5 for the Stoxx Europe 600 Index.
Fed Policy
Futures on the S&P 500 fell 0.1 percent after the U.S. equity benchmark gauge rebounded 0.4 percent yesterday. The Nasdaq 100 Index advanced 0.8 percent as a rally in Apple Inc. shares lifted technology companies.
“We’re going to get some volatility until you’re through the Fed meeting,” Kirk Hartman, who helps oversee about $331 billion as Los Angeles-based chief investment officer at Wells Capital Management, told Bloomberg TV. “Everything looks good until the Fed starts raising interest rates. Any kind of rapid increase in rates is going to be a shock for the markets but I don’t anticipate that.”
The Fed is gauging the strength of the economy as it winds down a bond-buying program and considers raising rates. Data this week may show that claims for unemployment benefits fell, retail sales improved, and consumer confidence rose, strengthening the case for higher rates next year as the world’s largest economy continues its recovery.
FTSE Outlook
Todays pivot is 6826, and I am expecting support there on an initial dip. Generally I am still expecting a bit of a rise, so that looks a decent enough entry level for today, unless you are still holding the long from yesterday when it hit 6800. Initial resistance is 6860 – a level that we also hit during the night, with 6895 above that, followed by 6937
If the pivot breaks then the next support is 6805, where we have the 25EMA on daily and S1, with the bottom of the Raffs below that, both around 6780 and also S2 here. Generally though I expect it to rise today, especially if the S&P pulls away from the1990 level later on.