Good morning. Friday’s trading actually worked out alright for once, managing to get a few points off the long from the 6510 area, though the rise was shortlived going into the weekend. Not surprising really with the Russia/Crimea/Ukraine situation still rumbling on. Talking of which the big news yesterday was the referendum, where 95% voted to rejoin Russia. A result not being totally believed in the West by the look of it. This week sees the UK budget on Wednesday, during which the chancellor is expected to report continuing growth.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional gauge extending the biggest weekly loss since 2012, as western nations disputed Crimea’s vote to rejoin Russia.
Aeon Co. (8267) sank 4.8 percent in Tokyo after Japan’s biggest retailer posted profit that trailed estimates. Tencent Holdings Ltd., Asia’s largest Internet company, slid 3.6 percent in Hong Kong after China blocked plans to offer virtual credit cards. SoftBank Corp., a Japanese phone carrier that owns part of Alibaba Group Holding Ltd., jumped 5.8 percent after China’s biggest e-commerce company kicked off the process for what may be the biggest U.S. initial public offering in two years.
The MSCI Asia Pacific Index lost 0.5 percent to 133.70 as of 2:15 p.m. in Tokyo, extending last week’s 3.5 percent slump. Almost two shares fell for each that rose on the gauge. Preliminary results show that more than 95 percent of voters in Crimea chose to leave Ukraine and become part of Russia in a referendum deemed illegal by the European Union and the U.S.
“If there are signs war is extending, it might impact Europe negatively,” Binay Chandgothia, a Hong Kong-based portfolio manager who helps oversee $250 billion at Principal Global Investors, said on Bloomberg Television. “At this stage its OK. It depends upon how severely Germany and the partners in the European Union view this referendum.”
Japan’s Topix index slid 1.3 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent. Taiwan’s Taiex Index was little changed.
Hong Kong’s Hang Seng Index slipped 0.4 percent, while the Hang Seng China Enterprises Index (HSCEI) of mainland companies added 0.3 percent. The Shanghai Composite Index gained 0.5 percent. South Korea’s Kospi index and New Zealand’s NZX 50 Index rose 0.2 percent.
China Outlook
A gauge of expected price swings in China’s yuan climbed to an 18-month high and the offshore exchange rate weakened as the central bank doubled the currency’s trading limits versus the dollar. Economists at UBS AG, Bank of America Corp., JPMorgan Chase & Co. and Nomura Holdings Inc. have cut forecasts for Chinese growth after disappointing data fueled speculation the nation may not meet its 7.5 percent economic-expansion target for 2014.
“Investors are pretty nervous about the China story at the moment,” Adrian Mowat, Hong Kong-based chief Asia and emerging-market strategist at JPMorgan Chase & Co., said in an interview on Bloomberg Television. “You throw in what’s going on in Crimea, and I imagine it’s going to be a pretty difficult week for the markets.”
U.S. Futures
Futures on the S&P 500 lost 0.1 percent. The U.S. benchmark index dropped 0.3 percent on March 14 amid concerns over the Crimea standoff.
Western countries have threatened to ratchet up sanctions against Russia if it doesn’t back down on annexing Crimea. Russia has deployed about 60,000 troops along the Ukrainian border, the government in Kiev said. The majority of Crimea’s residents are ethnic Russians and President Vladimir Putin says they are at risk after last month’s ouster of Ukraine’s president Viktor Yanukovych, who was backed by the Kremlin.
FTSE Outlook
Its not looking too hot on the daily trends at the moment as both the 10 and 20 day Raff channels are heading down. As I write this we are hovering around the daily pivot at 6527, which is acting as resistance. Bulls need to get the price above 6538 ASAP, to have any hope of some respite from the falls, but an overnight low of 6495 still shows the bears in control. Maybe we will see that 6200 level after all this year! Of course, if the Crimea situation continues to escalate, then that doesn’t bode well for stock markets, nor does the possible risk that the Malaysia plane has been stolen for a possible attack (all very odd that one, did hear a rumour that it had $500million of Chinese gold on board too….. could just be a heist after all).
We have the bottom of the 10 day Bianca channel at 6471 today, so if 6500 breaks then that level is worth a long again – the 10 day channel has been working pretty well this year, certainly for initial bounces anyway, so flags good entry levels. There is also a ProTrend line on the daily chart at 6476.