Good morning. Well the FTSE bounced off the bottom of that channel yesterday which was a bit annoying ask watched it dip a bit below the 6748 before bouncing, and hitting the stop – should have been more risk taking and gone wider after all. I did think we would see 6720 though if 6740 broke, so maybe the FTSE is being kept stable for a reason – an attempt to manufacture strength maybe? the Iraq situation looks pretty messy and looks more than likely to escalate – maybe more of an effect on Oil at the moment rather than the indices. Watch this space with that! FOMC meeting today where its expected another $10bn will be trimmed from the QE program. News at 7pm UK time for that. at 09:30 we have the BoE minutes out as well – will show how many for/against rate rises to give some idea as to how soon we might see them. My moneys still on end of Q3 2014.
Asia Overnight from Bloomberg
Asian stocks outside Japan fell as energy shares dropped ahead of a Federal Reserve monetary policy decision today. The Topix index rose for a second day in Tokyo.
The MSCI Asia Pacific Excluding Japan Index (MXAP) slipped 0.2 percent to 488.72 as of 11:20 a.m. in Hong Kong. The measure this month touched a three-year high amid improving U.S. economic data and indications Chinese growth is stabilizing. Fed policy makers conclude a two-day meeting after data this week showed U.S. manufacturing is expanding and inflation was faster than forecast.
“The U.S. economic expansion is unlikely to be at a sufficient pace that would make the Fed’s growth target achievable,” said Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which manages about $29 billion. “Recent housing numbers have been mixed, but the inflation data does not provide the Fed with the assurances it seeks that housing is likely to add to the broader recovery as rates are normalized.”
Regional Gauges
Japan’s Topix index gained 0.4 percent. Hong Kong’s Hang Seng Index was little changed and the Shanghai Composite Index slid 0.3 percent. House prices rose in just 15 of 70 Chinese cities in May, a survey by the National Bureau of Statistics showed.
Australia’s S&P/ASX 200 Index dropped 0.1 percent and South Korea’s Kospi index declined 0.4 percent. New Zealand’s NZX 50 Index retreated 0.3 percent. Taiwan’s Taiex Index added 0.1 percent and Singapore’s Straits Times Index was little changed. The MSCI Asia Pacific Index, which includes Japan, rose less than 0.1 percent to 143.57.
Futures on the S&P 500 added 0.1 percent today after the stock gauge rose 0.2 percent yesterday. The U.S. consumer price index increased 0.4 percent in May, the biggest advance since February 2013, after climbing 0.3 percent in April, a report showed yesterday.
A pickup in inflation lessens the threat of a prolonged drop in prices that hurts economic growth, giving Fed officials reason to continue to scale back their unprecedented bond-buying program. Continued hiring and faster wage gains will be needed to boost demand and enable consumers to cope with higher prices.
A Commerce Department report yesterday showed builders broke ground on 1 million U.S. homes in May, a 6.5 percent decline. The median forecast of 78 economists surveyed by Bloomberg projected 1.03 million housing starts.
Bond Purchases
The Federal Open Market Committee will reduce the pace of monthly asset purchases by $10 billion to $35 billion, economists project. Some 62 percent of 58 economists in a Bloomberg survey predict the Fed will halt bond buying at its October meeting.
Officials led by Chair Janet Yellen will release a new set of quarterly forecasts for unemployment, inflation, economic growth and the benchmark federal funds rate when their meeting ends. In March, policy makers predicted their target rate, now close to zero, would be 1 percent at the end of 2015 and 2.25 percent a year later.
FTSE Outlook
Bit of market moving news out today with the BoE minutes and then the FOMC at 7pm. With yesterdays rise it feels like the FTSE is being underpinned, and with todays pivot at 6759 we will probably get initial support there. The bottom of the 20 day Bianca channel is 6749 as well. resistance wise, 6791 will be the first buffer, followed but 6820 and 6846 – the top of the 10 day Bianca channel. I am thinking a day between 6749 and 6846 is most likely.