Good morning. Well with most indices closed the FTSE spent the day doing not a lot until 16:29 just before the bell when it popped up to the sell level we had at 6811, but not really very bearish – only dropping to 6790. After the US bell LinkedIn reported better results which saw the FTSE pop up a bit again and has held well overnight. Not many bears around at the moment! Today sees the NFP jobs news from the US, and if Wednesday’s ADP is anything to go on might see a better result than forecast (NFP forecast is 215k versus 192k previously).
The BoE make me laugh though, one day you have one member (Cunliffe) saying we need to be cautious as its dangerous to ignore house price boom, straight after another member (Dale) saying there is no bubble, nothing to worry about! Personally I’m with Cunliffe on this one as its a repeat of 2007 waiting in the wings. Ah but its different this time they all cry! As they always do, just before the bubble pops.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as investors weighed corporate earnings before the release of U.S. non-farm payrolls today.
Wynn Macau Ltd. jumped 3.1 percent in Hong Kong after the casino operator beat analyst estimates for profit. Treasury Wine Estates Ltd. jumped 6.1 percent in Sydney after the Australian newspaper reported that Pernod Ricard SA is interested in buying its U.S. assets. Sony Corp. lost 0.9 percent in Tokyo as the maker of Xperia smartphones and PlayStation consoles cut its earnings forecast for a third time in a year.
The MSCI Asia Pacific Index added 0.1 percent to 138.10 as of 12:57 p.m in Tokyo, reversing losses of 0.1 percent. The measure is heading for its second weekly decline after a gauge of Chinese manufacturing increased less than economists projected. While a report yesterday showed jobless claims in the U.S. jumped to a nine-week high, employment data due today is expected to show an improving labor market.
“The U.S. non-farm payrolls data due later today will be in focus as investors look for direction,” Tim Radford, a strategist at Rivkin Securities in Sydney, said by phone. “While earnings have been relatively good, concerns remain over slowing economic growth in China.”
Hong Kong’s Hang Seng Index (HSI) gained 0.6 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city climbed 0.5 percent as trading resumed following the May Day holiday. Markets in mainland China are closed again today for a holiday.
US Futures
Futures on the S&P 500 added 0.1 percent today. The gauge closed little changed yesterday, while the Dow Jones Industrial Average retreated from a record, ahead of today’s payrolls report.
U.S. Payrolls
U.S. employers probably added 218,000 workers in April, up from an increase of 192,000 in March, according to the median estimate in a Bloomberg survey of 94 economists. The Fed, which announced its fourth straight $10 billion cut to stimulatory bond buying April 30, says the job market in the world’s largest economy is improving.
Data yesterday showed claims for U.S. unemployment benefits rose to 344,000, the most since Feb. 22, after economists predicted a tally of 320,000. Separate reports showed the Institute for Supply Management’s gauge of U.S. manufacturing increased in April, while household purchases, which account for about 70 percent of the world’s largest economy, jumped by the most since August 2009.
FTSE Outlook
Despite a very dull day yesterday when not a lot happened the short order fired in the end but not for very many points. The key level of resistance is now the 6820 seen after 9pm last night a break of which should get 6830 and the top of the Bianca channels yet again, both around the 6845.6850 area therefore a short here should be alright. Support on the 10 day channel is 6771 but the way they market has been the past few days there never seems to be a dip to support to go long on! If that 6770 level were to break though then a trip down to 6650 and 6600 is possible.
Todays pivot is 6798 so pre NFP (which is liable to mean today could do anything) so i expect a climb this morning again leading up to the news then it to get spiky at 13:30. News could be anything but might be a catalyst for a drop, possibly! Looking at the Raff channels and the uptrend that is in tact then 6900 is possible, and I’m still watching 1919 on the S&P to be hit soon. It will turn once its burnt a few more bears and got as many people as possible bullish, as it is always want to do.
As its Friday I’m only going for 2 possible trades, off the bigger picture resistances as its likely to just chop around I think pre NFP. I think we will get initial resistance at 6830, then a dip (maybe only to the pivot though) then a rise again. Either way its going to be tricky today, though risky long off the pivot might also work as well as a short at 6630 though I haven’t put them int he trade plan below. Tight stops though!