Good morning. Interesting day yesterday, if you read the media (and actually took any notice) you would have bet your bottom dollar on it being bearish, however, despite the initial dip 9that went slightly below the 6520 support) we sure as heck bounced back, reaching that 6572 almost in a straight line! The short there kicked in and grabbed a few though it wasn’t till later when the yanks got bearish and we saw a dip to 6547. The Russia/Ukraine situation continues to rumble on, though interesting gas futures have actually dropped so make you wonder whats going on and if we get the full story. Either way its still likely to weigh on markets, and Obama and Putin spoke yesterday. Gold continues to stay within that 30 minute channel and we should get 1350 before too long.
Asia Overnight from Bloomberg
Emerging-market shares slid a third day and commodities fell as the slowest Chinese money supply growth in almost 13 years tempered optimism from improving U.S. economic data. Japan’s Topix index rose for the first time in eight days and Australia’s dollar retreated.
The MSCI Emerging Markets Index slipped 0.3 percent as of 1:36 p.m. in Tokyo, as Hong Kong’s Hang Seng Index fell 1.1 percent. The Topix climbed 0.5 percent.Standard & Poor’s 500 (SPX) Index futures were little changed. The Aussie retreated 0.3 percent as the central bank forecast steady rates. Crude fell from a six-week high, leading the S&P GSCI Index of commodities lower. Palladium dropped from the highest close since August 2011 as Russia, the metal’s biggest producer, faces the prospect of further sanctions over unrest in Ukraine.
Chinese shares declined as the broadest measure of credit fell 19 percent from a year earlier in March and money supply grew the least since 2001 before data that’s expected to show economic growth slowed in the first quarter. Federal Reserve Chair Janet Yellen will speak today as manufacturing and inflation reports are released after better-than-estimated retail sales and Citigroup Inc. earnings buoyed U.S stocks. U.S. and European lawmakers are looking at how to punish Russia for its support of separatists in Ukraine.
“Investors are a bit worried because M2 is quite low,” Zhang Haidong, an analyst at Tebon Securities Co., said by phone in Shanghai. “New loans may be better than expected by a little, but it’s still not considered good data; we still think liquidity is very tight.”
China’s one-year interest-rate swap dropped as much as eight basis points to a one-month low of 4.05 percent after the data. Aggregate financing was 2.07 trillion yuan ($333 billion) in March, the People’s Bank of China said in Beijing today, down from 2.55 trillion yuan a year ago. M2, China’s broadest gauge of money supply, rose 12.1 percent from a year earlier, compared with the 13 percent median estimate of analysts in a Bloomberg News survey and 13.3 percent in February.
China’s gross domestic product grew 1.5 percent from the previous three months, according to the median estimate in a Bloomberg News survey ahead of data released tomorrow, down from 1.8 percent in the fourth quarter. That indicates a sharper deceleration than the median projection for 7.3 percent growth from a year earlier, down from 7.7 percent.
Ministers accused the Russian government of stoking the latest unrest with the same methods it used to destabilize the Black Sea peninsula before moving to take it over. U.S. President Barack Obama warned Putin of further consequences for supporting the separatists.
Ukraine’s central bank raised its benchmark discount rate to 9.5 percent from 6.5 percent to support the hryvnia, the world’s worst-performing currency this year, after clashes between pro-Russian separatists and government forces in the east of the country turned deadly.
Ukraine is facing its third recession since 2008 and dwindling foreign-exchange reserves.
The S&P 500 and Nasdaq Composite Index (CCMP) rallied more than 1 percent early in the day yesterday amid optimism on earnings and the U.S. economy. Stocks wiped out their gains as the market headed into the final hour of trading, only to rebound before the close. The Nasdaq Composite ended the day with a 0.6 percent gain, while the Russell 2000 Index added 0.4 percent.
The S&P 500 slid 2.6 percent last week amid disappointing results at JPMorgan Chase & Co. and signs hedge funds were dumping the bull market’s best performers. The benchmark index dropped as much as 4 percent from an all-time high on April 2 as concern grew that valuations may be too high as earnings season begins.
With the Russia/Ukraine situation continuing then that will be a concern to markets, though with the results season underway in the US we will get the volatility. Citi results yesterday beat, showing JPM how its done(!!). we had a good bounce off the bottom of the Raff channel area yesterday and as you can see int he chart below are almost at the 20 day mid point. With yesterdays rise we are back within the Bianca channels (only usually stay outside of them for a couple of sessions while they adjust after a big move or break through. As such i have support at 6558 being the 20 day Bianca channel and also the daily pivot for today. I therefore feel that will be a good place to go long.
I have put in an initial rise this morning to 6596, though thats only 14 points from where we are as I write this so we might not get that high initially, as that dip last night from this area to 6547 could be foretelling. Todays divi is 3.2 so not too exciting to lure lots of divi hunters at the close I wouldn’t have thought.
After 6596 resistance the next level is 6619 then 6636. If the 6558 level does hold then 6619 is my target, though looking at the daily chart we have the EMAs to act as resistance – 10EMA at 6585 and 25EMA at 6606, so bear that in mind. Not an overly clear picture for today and can be argued both ways.