Good morning. 6840 didn’t hold for too long yesterday though the 6820 was better as it bounced back 20 points. There is a real battle going on between bears and bulls at the moment and this choppiness isn’t ideal – most are waiting for the ECB on Thursday and NFP on Friday which will see some bigger movements, as the range on the FTSE was still relatively small. The S&P held its support at 1918, though failed to break 1925 for a push to 1930. We will probably get more of the same on the FTSE today, though for the bulls we are on the bottom of the 10 day Raff and the 25EMA on daily at 6822… will they hold that level?
Asia Overnight from Bloomberg
Asian stocks fell, with regional benchmark index retreating from a seven-month high, as investors await a report on U.S. jobs and a decision from the European Central Bank on monetary policy.
The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 142.78 as of 12:29 p.m. in Hong Kong nine of the 10 industry groups on the measure retreated. A private survey on the U.S. labor market is due today, while investors are assessing European inflation data to gauge if the ECB will announce an interest-rate cut tomorrow.
“With U.S. economic data starting to ramp up, some investors feel this warrants a bit of caution,” Stan Shamu, a markets strategist in Melbourne at IG Ltd., said by e-mail. “At the same time, we have the European situation where traders just continue to speculate what action the ECB will take this week.”
Japan’s Topix index gained 0.3 percent. Australia’s S&P/ASX 200 Index slipped 0.3 percent as a report showed gross domestic product rose 1.1 percent from the previous quarter, beating economist forecasts. New Zealand’s NZX 50 Index (NZSE50FG) was little changed. South Korea’s market is closed for a holiday.
Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index of mainland shares traded in the city both lost 0.6 percent. Taiwan’s Taiex Index added 0.1 percent and Singapore’s Straits Times Index declined 0.4 percent. Thailand’s SET Index was little changed and India’s BSE S&P Sensex Index slid 0.1 percent.
Europe Inflation
Euro-area inflation slowed more than economists projected in May. ECB President Mario Draghi has signaled he will act to prevent deflation in the 18-nation bloc. Of 50 economists surveyed by Bloomberg, 44 predict the ECB will become the first major central bank to take interest rates negative by cutting its deposit rate. All but two of 58 respondents said the benchmark rate would also be reduced.
Today’s ADP National Employment report in the U.S. is expected to show an increase of 210,000 workers for May after recording a gain of 220,000 in April, a Bloomberg survey of economists showed.
Futures on the Standard & Poor’s 500 Index lost less than 0.1 percent today after the U.S. gauge closed little changed, near a record high.
FTSE Outlook
The 6820 lower level held ok and today that also seeing the 25EMA and the bottom of the 10 day Raff at that level too. If the bears were to break that then 6800 and 6785 are likely next supports. Todays pivot is 6839 so likely to be initial resistance (below pivot says bearish bias, above daily pivot bullish bias, generally speaking). If it can get above the pivot and the 6845 level then 6865 and possibly 6890 beckon. Longs around 6820 could be good but I think that we might well see another fairly small range day. All that said, I am preferring shorts off the resistances so look to short the rallies to those levels, assuming we get some!