Good morning.
Market Summary for Wednesday
The FT100 opened above 5900 but fell sharply in afternoon trade after U.S. data showed that the economy’s service sector expanded at a slower-than-expected rate, raising concerns that weakness in manufacturing was spreading to other areas of the economy. It briefly fell below 5800 before recovering into the close. A downgrade and poor figures in the finance and banking sector also put downward pressure on the index. Commodity shares performed better as the oil price rose by 5%.
Another day of 100+ swings in the FT100 shows that there is still danger in this market as the volatility continues.
US & Asia Overnight from Bloomberg
Asian stocks climbed with the region’s currencies as a selloff in the dollar underpinned a resurgence in crude oil.
A gauge of Asian shares rose for the first time in three days, led by mining and energy companies, while U.S. index futures advanced. Japan’s Topix index declined as the yen surged overnight. South Korea’s won rallied the most in three months and the ringgit climbed 1.5 percent after the dollar tumbled against a basket of other currencies on Wednesday. U.S. oilextended gains above $32 a barrel after jumping 8 percent in the previous session.
“The selloff in the U.S. dollar is supportive of commodities,” said Scott Schuberg, chief executive officer at Rivkin Securities, a brokerage in Sydney. “We’ve been trading under conditions that’s been fairly gloomy. The outlook for China has been gloomy for years now. I don’t really think that there’s too much negative sentiment that could be piled on to this market. Investors should start buying slowly.”
The dollar’s retreat was sparked by data showing the U.S. services sector grew at the slowest pace in nearly two years, underscoring the vulnerability of the American economy to unsteadiness abroad. The report tipped the fixed-income market’s balance closer toward zero rate hikes by the Federal Reserve this year, amid prospects central banks from Asia to Europe will act to quell the turmoil that’s roiled markets in 2016. The greenback’s drop helped boost the price of crude oil, along with speculation OPEC and other oil producing nations have agreed to an emergency meeting on market volatility.
China set a range for its economic growth target for the first time in 20 years, saying late Wednesday that the economy would likely expand 6.5 percent to 7 percent this year, slower than last year’s goal of about 7 percent. Gyrations in Chinese equity and currency markets unsettled global trading at the start of the year, with regulators’ response to the volatility fueling anxiety over their ability to manage the slowing economy.
Stocks
The MSCI Asia Pacific excluding Japan Index rose 0.7 percent at 2:49 p.m. Tokyo time, with Australia’s S&P/ASX 200 Index up 2.1 percent. BHP Billiton Ltd., the world’s biggest mining company, rallied for the first time in four days. The Hang Seng China Enterprises Index, a gauge of mainland Chinese stocks listed in Hong Kong, jumped 1.8 percent, while the Shanghai Composite Index advanced 1.1 percent. South Korea’s Kospi index gained 1.3 percent.
The Topix fell 1.1 percent, headed for its lowest close in more than a week.
Futures on the Standard & Poor’s 500 Index added 0.4 percent after the gauge climbed 0.5 percent last session, amid rallies in Exxon Mobil Corp. and Chevron Corp. [Bloomberg]
FTSE Outlook and Prediction
That was quite a sharp move down yesterday from 5920 to 5790 before an equally sharp recovery to bring us back above 5900. Certainly tricky conditions at the moment, though the long earlier in the day from the 5868 area worked out well for a gain. Volatile has certainly been the trend of the year so far! For today it actually looks fairly positive though there is resistance first thing at the 5945/5950 area so we may see an initial dip, which would work out well to test the 25ema on the 30min at 5910ish, which would be a decent long entry. Its NFP news tomorrow so something to bear in mind today and tomorrow morning, generally at the moment the news flow is fairly positive. Oil is holding steady around the $32 area as well. We have a pretty decent rising channel on the 10min chart as well at the moment with a rise to 6000 showing as possible, and with a cluster of resistance levels around here the bulls might have a bit of a job here. If it goes really bearish today (don’t think it will) then 5827 is the bottom of the 10 day Bianca, with 5800 bottom of the 10 day Raff. So, fairly simple trade plan at the moment, short term looks bullish up to 6000.