Good morning. The markets are consolidating after the big moves up over the previous days and additionally gone into waiting mode ahead of the FED interest rate meeting this Wednesday. Probably no big moves until then with 6450-6500 being the top for any upward moves. Sector wise it was the turn of the “safe” shares to move up with more risky cyclic shares hitting some profit taking with commodities, media and engineers taking the biggest hits. The morning long at 6410 worked out well, but the short got stopped at 6455 before it fell, annoying as the high was 6455.3. Arggghhhhh. Dax long order missed by 6 points before rallying 100 points too. C’est la vie!
US & Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index retreating from its highest in two months, as energy shares led losses and investors awaited policy decisions by the Federal Reserve and the Bank of Japan later in the week.
The MSCI Asia Pacific Index lost 0.1 percent to 136.31 as of 9:02 a.m. in Tokyo after closing Monday at the highest since Aug. 18. The decisions on monetary policy come after China cut its lending rate last week and European officials signaled a willingness to add stimulus to combat flagging growth. The odds the Fed will raise rates at the end of their two-day policy meeting on Wednesday are slim, with traders seeing a 6 percent chance. Economists are divided on whether the BOJ will supplement already unprecedented easing on Friday.
“There are no real major moves happening in the market as traders are just sitting on the sidelines waiting to see what will happen,” Angus Nicholson, an analyst at IG Markets Ltd. in Melbourne, said by phone. “The Fed and the BOJ meetings this week are pivotal events that will determine whether this rally can go any higher. If we see the Fed push back raising interest rates toward 2016 and the BOJ step up stimulus, that will have a big positive impact on equities.”
Japan’s Topix index slipped 0.1 percent. South Korea’s Kospi index fell 0.2 percent. Australia’s S&P/ASX 200 Index was little changed. New Zealand’s S&P/NZX 50 Index added 0.5 percent. Markets in China and Hong Kong have yet to start trading.
The Shanghai Composite Index climbed 0.5 percent on Monday after the central bank cut interest rates for a sixth time in a year as the nation’s leaders gather this week to map out a five-year plan for the world’s second-largest economy. The Shanghai gauge has rebounded 17 percent from this year’s low on Aug. 26 as the government took measures to stabilize the stock market after a $5 trillion rout and policy makers introduced more measures to boost growth amid the slowest economic expansion in a quarter of a century.
E-mini futures on the Standard & Poor’s 500 Index were little changed. The underlying gauge of U.S. equities slipped 0.2 percent on Monday, dropping for the first time in three days, as investors assessed recent gains before the latest batch of earnings. [Bloomberg]
FTSE Outlook
6400 is the levels that the bulls will be keen to defend to crystallise the recent gain over the past few sessions so as we have tested that and the S1 level at 6396 overnight we could get an early rise to the 6434 area. However, there is now resistance there on the 2 hour chart, and also the 30min has a declining PRT channel at that level. As such worth a short were, as if the bears have a go then the bottom of the 10 day Bianca at 6364 is likely to be tested on a break of 6400. As mentioned above the Fed will be talking interest rates again on Wednesday, no change I expect, though there might be some clues for the future. So, for today I am thinking an initial rise then a dip back down and possibly another fairly steady day, similar to yesterday. This time hopefully not getting stopped out by half a point before it moves!