Good morning. Well its certainly being a bit tricky this week and I wasn’t expecting to see 6550 yesterday. That was the bottom of the 20 day Bianca channel and held pretty well in the end though the initialling was half closed at 70 and rest at 62. the earlier long that I SMS’d at 6602 managed a few but then got stopped at break-even. So a few points gained but not as many from that rise to 6600 later int he day as i would have hoped – was just being a bit too cautious I guess, which is probably prudent on day when its dropping and going counter trend, even if it was bull Tuesday!
Decent manufacturing news yesterday had little effect on halting the initial fall, whilst news that the UK will have the strongest economic growth (2.9% GDP forecasted) of the G7 failed to get anyone excited (wonder why….. probably as its just a number plucked from thin air and doesn’t actually mean anything and is bound to be revised and adjusted over time as it always is!). Unfortunately its once again growth built on credit and the underlying issues are still there so the chickens will come home to roost yet again, probably making 2007/2008 look like a minor hiccup. This article sums it up quite well. The reality correction of the overpriced stocks mostly on the Nasdaq continues and about time too.
Asia Overnight from Bloomberg
Asian stocks outside Japan rose, with a gauge of regional shares heading for the highest close in five months, as consumer companies advanced. Japanese equities fell after the yen rose the most since August.
The MSCI Asia Pacific excluding Japan Index gained 0.9 percent to 481.32 as of 12:04 p.m. in Hong Kong. About two shares climbed for each that fell. The Hang Seng China Enterprises Index gained 0.4 percent, with the gauge of mainland shares listed in Hong Kong on course for the highest closing level since January. The measure rebounded 12 percent through yesterday since entering a bear market on March 20.
“Below the surface, the global recovery is actually stronger than most investors perceive it to be,” Thomas Thygesen, head of cross-asset strategy at Skandinaviska Enskilda Banken AB, which has $213 billion in assets under management, told Bloomberg TV in Hong Kong. “There’s a clear sign that China is moving away from the credit tightening that was a big source of the growth uncertainty at the beginning of the year. That’s one of the keys to keeping the global economy on track this year.”
Regional Gauges
Hong Kong’s Hang Seng Index rose 1 percent and Taiwan’s Taiex index added 0.4 percent. South Korea’s Kospi was little changed and New Zealand’s NZX 50 Index added 0.7 percent. Singapore’s Straits Times Index rose 0.1 percent and Australia’s S&P/ASX 200 Index (AS51) advanced 1.2 percent. India’s S&P BSE Sensex Index climbed 0.4 percent, snapping a three-day drop.
The Shanghai Composite rose 0.1 percent. Trainmakers CSR Corp. and China CNR Corp. advanced after the People’s Daily said the government boosted its railway investment target for this year.
Japan’s Topix index slid 2.1 percent as the yen traded at 101.98 per dollar. The currency strengthened 1.3 percent yesterday to touch a three-week high.
U.S. Recovery
The MSCI Asia Pacific Index, which includes Japan, fell 0.2 percent to 138.28. It has risen the past two weeks, climbing last week to its highest level in more than two months, as U.S. data pointed to a recovery after severe winter weather curbed growth and China outlined stimulus to ward off a slowdown. The measure yesterday traded at 12.5 times estimated profit compared with 15.8 on the Standard & Poor’s 500 Index, Bloomberg-compiled data show.
China is able to loosen monetary policy “moderately in some areas for a while,” such as by cutting the reserve requirement ratio, Zhang Monan, a researcher at the China Center for International Economic Exchanges, wrote in an article in the China Securities Journal.
Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the International Monetary Fund said in a report yesterday. The IMF predicted global growth of 3.6 percent this year, compared with a January estimate of 3.7 percent. Next year, the expansion will accelerate to 3.9 percent, unchanged from the prior forecast.
S&P 500 futures were little changed today. U.S. stocks rose yesterday, with the Nasdaq 100 Index rebounding from its worst three-day drop since 2011, as technology shares from Google Inc. to Facebook Inc. rallied. Alcoa Inc. added 1.9 percent after the close of regular trading as it reported earnings that topped analyst forecasts.
FTSE Outlook
The bottom of the 20 day Bianca channel held well yesterday with the test (twice!) of the 6550 area. Today sees both Bianca channels in the 6575/6585 area and with todays pivot from live charts at 6588 we might find support at this area. However, its been pretty weak since the initial climb to the 6600 area yesterday evening not really doing much since. Some are saying that the Russia situation is what is causing this rather weird behaviour on the indices and that might well be the case. That and probably quite a few traders have taken Easter off for the last ski trip of the season!
Anyway, for today if 6595 can be broken and held then the bulls will be looking to reach 6628 and 6650. If that 6580 area breaks then 6520 and even 6450 (bottom of the Bianca 50 day) are downside supports.