Good morning. The rise started to look promising yesterday hitting 7090, until Greece popped back into the news with rumours hitting the market that Greece is prepared to default on its debt unless it can come to some form of arrangement with it’s creditors by the end of this month, the rumour was claimed to be unsubstantiated by a Greek official leaving traders uncertain of what or who to believe. Seemed a little odd considering they just made a payment on Monday, so to start talking about defaulting already is a little odd. However, shows how jittery the market is where Greece is concerned. Asia retreated overnight for the first time in a while on weakening Chinese economic growth. Inflation remained at zero in March, as a fall in gas and clothing prices was offset by higher fuel costs. House prices in the UK dipped slightly YoY, increasing by 0.6pc month on month in February, but the annual pace of growth in property values is showing signs of slowing across the majority of the UK, according to an official report. Year-on-year growth stood at 7.2pc in February, edging down from 8.4pc recorded in the year to January, the Office for National Statistics (ONS) said.
US & Asia Overnight from Bloomberg
Asian stocks retreated from an almost seven-year high and the Australian dollar slid against most peers as data showed China’s economic growth slowed to the weakest pace since 2000. Crude oil rose for a fifth day.
The MSCI Asia Pacific Index dropped 0.5 percent by 1:15 p.m. in Tokyo, as the Hang Seng China Enterprises Index pared gains. Australia’s S&P/ASX 200 Index slipped 0.6 percent as the Aussie weakened 0.5 percent versus the dollar. Standard & Poor’s 500 Index futures fell 0.1 percent. Oil in New York and London rose at least 0.5 percent. Wheat and corn fell.
China’s economy expanded 7 percent in the first quarter, while March industrial production growth was lower than all estimates in a Bloomberg survey. Chinese stocks have rallied in the face of reports signaling a slowdown on speculation that the government will need to expand stimulus. The European Central Bank reviews interest rates Wednesday.
“Taken together, the first quarter data paint a dreary picture of the state of the economy,” said Bloomberg Intelligence China economists Tom Orlik and Fielding Chen. “We believe the industrial output numbers provide the more accurate guide, and the government is poised to accelerate efforts to support demand.”
The MSCI Asia Pacific Index finished Tuesday at the highest since May 2008, with all 10 industry groups having advanced this year. Eight of the 10 biggest advances have been among Chinese stocks this year.
China’s one-year interest-rate swaps dropped to as low as 3.01 percent, the lowest since Dec. 3, amid expectations for further monetary easing. The volume of transactions in Hang Seng Index stocks was about 80 percent above the 30-day average for the time of day.
The Shanghai Composite Index slumped 1.1 percent, while a gauge of equities in the southern city of Shenzhen plunged 3 percent. The benchmark gauge for China’s largest venue more than doubled since January 2014 amid government efforts to support growth and encourage a greater role for markets.
Premier Li Keqiang’s government has already relaxed home-purchasing rules, cut interest rates twice and reduced the reserves banks must set aside in recent months. March retail sales climbed 10.2 percent, compared with the 10.9 percent median projection. Fixed-asset investment excluding rural areas expanded 13.5 percent in the first quarter, compared with the 13.9 percent seen by economists.
Japan’s Nikkei 225 Stock Average was little changed as the yen weakened 0.3 percent to 119.69 per dollar. The currency climbed as much as 0.9 percent Tuesday. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major peers, was up 0.2 percent after lackluster U.S. retail sales data spurred Tuesday’s 0.7 percent drop.
The Aussie weakened for the third time in four days, declining to 75.96 U.S. cents. China is the southern country’s biggest trading partner. The euro weakened 0.3 percent to $1.0625.
In the oil market, West Texas Intermediate crude climbed 0.6 percent to $53.59 a barrel, extending its five-day gain after March’s 4.3 percent drop. Brent oil added 1 percent to $58.99 a barrel, headed for its highest close since April 7.
Iran became the second OPEC member this month to suggest reducing the group’s production target, with Oil Minister Bijan Namdar Zanganeh on Tuesday urging a cut of at least 5 percent to stem a glut.
Industry data released after the close of Tuesday trading in the U.S. was said to indicate the rate of inventory increases had eased, with the government to report on supplies Wednesday after saying earlier in the week that the shale boom is ending.
Wheat futures for July delivery declined for a third straight day, slipping 0.4 percent to $4.945 a bushel to bring its drop this week to more than 5 percent amid forecasts for rain across U.S. producing regions. Corn dropped 0.3 percent, retreating for the seventh time in eight days.
Intel Corp. climbed more than 2 percent in extended U.S. trading after reporting earnings. The world’s largest computer posted steady first-quarter sales and an increase in net income.
JPMorgan Chase & Co. advanced 1.6 percent in ordinary Tuesday trading after the biggest U.S. bank said profit rose 12 percent to top estimates. Wells Fargo & Co. slipped 0.7 percent as its lending margin slid below 3 percent for the first time since the 1990s. [Ref]
Todays pivot is 7070 so we have initial support here, and its where we are as I write this, with 7046 the next support below that, where we have the 200ema on the 30minute. Overnight, as Asia has weakened has led to the 30min EMAs crossing over to bear as well, having been bullish for all of yesterday. The bulls were definitely trying for 7100 before that Greece rumour started. Based on the 30min EMAs the bulls will need to push above 7075 initially, to target 7090 again, yesterdays high, with the potential for 7100 and 7123. The bears are trying to break through the bottom of the 10 day Raff which is also at this 7070 area for today, so the open really is going to be key for who rules the roost today. 7070 holds then we should be bullish, bears break it then i expect 7046, possibly even 7015 (bottom of the 10 day Bianca) and maybe 6999. Below that the next support is 6952 where we have the 25ema on the daily chart to act as support, and maybe act as a spring board for another push higher. The bulls have certainly made hard work of trying to move above 7100, so a dip and then further rise would bring the daily RSI (currently 64) down a bit for a more concerted effort to push higher. There is a divi of 4.9 today to be applied at the closing bell (IG) or 9pm (other platforms).