Good morning. Frustratingly it didn’t quite reach the short order at 6845, instead not managing to break the pivot before dropping to 6800. That level held though as if that breaks then there is most likely going to be a fall to 6700. Today is of course ECB news day, when we get the ‘big reveal’ of any stimulus and possible negative interest rates. Tomorrow we have NFP so these 2 days will see some action. ADP yesterdays was slightly below forecasts so could be a precursor for NFP also being slightly below.
Asia Overnight from Bloomberg
Asia’s benchmark stock index swung between gains and losses after better-than-forecast data on U.S. service industries and as investors await a European Central Bank policy decision.
The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 142.77 as of 11:14 a.m. in Hong Kong, having earlier gained 0.1 percent. Five shares dropped for every four that rose. The gauge closed June 3 at the highest since October, after rising the most last month since September amid optimism China will add stimulus to prop up growth.
“The U.S. economy isn’t shooting the lights out, but growth in the second half will be decent enough to justify the Fed winding back quantitative easing,” Tony Farnham, a Sydney-based strategist at Patersons Securities Ltd., said in a phone interview. “No one wants to bravely put on a large position ahead of the ECB decision today.”
Japan’s Topix index and New Zealand’s NZX 50 Index (NZSE50FG) were little changed. Australia’s S&P/ASX 200 Index retreated 0.1 percent and South Korea’s Kospi index lost 0.8 percent. Singapore’s Straits Times Index slid 0.2 percent and Taiwan’s Taiex index slipped 0.1 percent. Hong Kong’s Hang Seng Index and China’s Shanghai Composite both fell 0.2 percent.
U.S. Futures
Futures on the Standard & Poor’s 500 Index were little changed today after the U.S. gauge closed yesterday at a record high. Service industries in the U.S. expanded at the fastest pace in nine months in May. A private report showed employment rose less than economists projected before the government releases monthly payrolls data tomorrow.
The Federal Reserve said in its Beige Book review of regional conditions that the world’s largest economy expanded at a modest to moderate pace last month. The Beige Book, released two weeks before policy makers meet, supported Fed Chair Janet Yellen’s view that the U.S. economy is rebounding from a 1 percent contraction in the first quarter caused largely by harsh winter weather.
The ECB may become the first major central bank to take interest rates negative today as President Mario Draghi seeks to ward off deflation in the euro area.
FTSE Outlook
Damn frustrating sometimes – price goes so close to the short order and then just misses, then the long that did take failed. Anyway, 6800 held though the FTSE is definitely lagging the S&P which rose from the 1919 support area to hit the 1927 resistance. That and 1930 represent decent shorting areas.
If the FTSE breaks below 6800 then the bears are more than likely going to take it down to 6700. The key level today is where we are as i write this – right on the daily pivot at 6819, if the bulls can break that then 6832 (near the monthly pivot) and 6850 (weekly pivot) look possible, the latter being a great place to short.
Of course most of todays action is going to hinge on the ECB and what they announce. Prices usually rise in advance of such things but its been a bit lacklustre so is Draghi going to disappoint, though of course he is the one who said “we will do whatever it takes” a while back.
We do have the BoE rate decision at 12pm – expected to remain at 0.5%. Wont be too long before they put it up to temper the housing market though.