Good morning. Hope you had a good weekend. Well Ukraine didn’t figure much in the news despite what some were expecting, in fact the financial news was all quite quiet. It does all still look like we will continue the current slow grind higher, especially looking at the FTSE Bianca chart we could be on for 6900 this week. If we do make that all time high above 6930 and possibly a little more then the bears might appear – they are in hiding at the moment!
Asia Overnight from Bloomberg
Asian stocks outside Japan rose as Chinese shares surged on speculation the government will take steps to bolster equities.
The MSCI Asia Pacific excluding Japan Index climbed 0.4 percent to 477.02 as of 11:53 a.m. in Hong Kong, with all but two of the 10 industry groups rising. China will relax limits on foreign investment in listed companies and expand quotas for capital flow, the State Council said last week. President Xi Jinpingsaid China needs to adapt to a “new normal” in the pace of economic expansion.
“He is trying to tell the world that China is adjusting itself to slower growth,” Vasu Menon, vice president of wealth management in Singapore at Oversea-Chinese Banking Corp., said of Xi’s comments. “He seems to be clearly sending a message that the economy needs reform, clearing a lot of issues such as credit, shadow banking, property market and excess capacity in some industries.”
‘Strategic Opportunity’
China’s growth fundamentals haven’t changed and the country is still in a “significant period of strategic opportunity,” Xi said, according to a Xinhua News Agency report on the central government website on May 10. At the same time, the government must prevent risks and take “timely countermeasures to reduce potential negative effects,” he said.
Earnings Analysis
The MSCI Asia Pacific Index, which includes Japan, added less than 0.1 percent after dropping as much as 0.4 percent. Among companies on the Asian gauge that reported quarterly results since April 1 and for which Bloomberg had estimates, 51 percent beat projections for profit. Sharp Corp., Nissan Motor Co. and Hitachi Ltd. are scheduled to report earnings today.
Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The measure advanced 0.2 percent on May 9 while the Dow Jones Industrial Average rose to a record.
Dennis Lockhart, president of the Atlanta Fed, said he expects the central bank will use a reverse-repurchase program when it eventually begins to tighten monetary policy. Lockhart, who doesn’t vote on policy this year, told reporters yesterday after a speech in Dubai that reverse repos may play a role in influencing short-term rates.
FTSE Outlook
Fridays short order at 6861 wasn’t quite reached and that area is resistance again today, with 6850 being the top of the 30 min channel and 6865 being a ProTrend horizontal resistance area. As I mentioned above though it does look like the bulls are still in control and the bears might get squeezed a little bit longer. Support wise for any dips are the pivot at 6820, and then 6776 isn which is the bottom of the Bianca 20 day channel. Any moves below that will lead to the next support at 6727 though.
Initially today I am favouring a rise to that resistance area where I think we will see a bit of a stutter at around that 6850 area. I expect support will hold as the bulls will be keen to push on for new records to make some headlines soon; I am thinking the pivot and the bottom of that 30 minute channel at 6820/6810 will hold, if not then 6775 is more likely to hold.