Wow! It was all going so well with the long at 6725 (helped by the ECB rate cut), cashed out at 6775 to take the +50 as the GDP news was coming out, and with the shut down last month expected to struggle to reach the forecasted 2%. And what happened – it smashed it at 2.8% and once again eyes went immediately to stimulus and a mass panic that it would be pulled sooner rather than later. That’s triggered some pretty large falls, with the Dax giving up all its gains (it hit 9200 pretty much to now be back where it was yesterday morning, and the FTSE dipped to 6644). I still stand by my hunch that no tapering till next year, probably end of Q1. If it was me id want steady monthly data on a regular basis before even thinking about stopping it. A fact reiterated by France being downgraded to AA from AA+ overnight. Interestingly though the S&P has found support at 1647, and has the POTENTIAL to now climb to 1787. Wouldn’t that upset the bears! However, we have the US Payrolls jobs data out today which will probably light a “taper” (get it, taper, oh never mind) under prices at 13:30, as that figure will have been impacted by the shutdown last month. forecast is 125k and 7.3% unemployment.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index heading for the longest streak of weekly losses in five months, after faster U.S. economic growth fueled concern the Federal Reserve may reduce stimulus sooner than expected.
The MSCI Asia Pacific Index dropped 0.4 percent to 139.78 as of 2:07 p.m. in Hong Kong, extending this week’s retreat to 1 percent, its third straight weekly loss. About three shares declined for every one that rose. The gauge gained 8.4 percent this year through yesterday amid unprecedented stimulus from the Bank of Japan and optimism the Fed will continue its bond buying into 2014.
“The stronger GDP data has led some to believe that the Fed will start tapering a bit earlier than they otherwise thought,” Keith Poore, head of investment strategy at AMP Capital Investors Ltd. in Wellington, which manages about $130 billion, said by telephone. “Payrolls is going to be a messy number because of the impact of the shutdown. The market has got ahead of earnings, so we shouldn’t be surprised to see a little bit of weakness,” he said, referring to last month’s temporary closure of the U.S. government.
Investors’ focus now shifts to today’s U.S. October payrolls report after data yesterday showed growth in the world’s biggest economy accelerated to a 2.8 percent annualized rate last quarter, faster than the 2 percent median estimate of economists, and the European Central Bank unexpectedly cut interest rates.
Economists predict a report today will show U.S. payrolls climbed by 120,000 in October and the unemployment rate increased to 7.3 percent from 7.2 percent in the previous month.
The S&P 500 dropped 1.3 percent yesterday, its biggest loss in two months, after the GDP report. Still, the data showed the biggest gain in inventories since the beginning of 2012, which risks holding back the economy this quarter as companies limit production.
The benchmark of American equities has rallied 23 percent this year, challenging 2009 for the best annual gain in a decade, as corporate earnings beat estimates and the central bank kept interest rates low to spur economic growth.
I am watching the S&P today to see if 1747 holds (tested twice last night so a double bottom so far), if it does then the bulls are still in play and we have a rise to 1787 on the cards, which should take the FTSE Dax etc. up with it. If 1747 breaks then 1737 and 1731 are the next supports. Resistance wiser, if 1747 does hold, will be at 1755. On to the FTSE. With price below both the 10 and 20 day Bianca channels I would expect us to get back within them at some point soon. We will need to break the 6686 level today though so as to ensure we don’t just bounce back up, test the bottom of that channel and drop again. So today, being Friday as well, stay extra nimble! With the updated Raff channels for today we are at the bottom of both which is why I am thinking a modicum of support here between 6640 and 6650. With the current price as I write at 6665 I think a little dip at the open is likely, especially as the 30 minute EMAs are bearish.