Good morning. Well it certainly staying volatile, and we have retested the 6500 level overnight, and not far off the top of the 10 day Raff at 6520, having hit the bottom of that channel on Tuesday at 6330. Shocking events in Paris with another ‘lone wolf’ attack (really don’t know how the security forces can counteract those sort of attacks), but decent data on the jobs front out of the US yesterday, with initial claims falling to 290k. The fed also said that no likely rate rises till April at the earliest, but even then I doubt they will put rates up then. I said the good news will start to flow next week after that run of bad, so might have started a bit earlier. US labor market reports tomorrow are projected to show non-farm payrolls increasing by 240,000 and the unemployment rate dropping to 5.7 percent.
Asia Overnight from Bloomberg
Asian stocks climbed from a three-week low as Samsung Electronics Co. beat earnings estimates and Japanese exporters rallied on a weaker yen. U.S. equity-index futures signaled a second day of gains as crude oil rose, boosting Malaysia’s ringgit.
The MSCI Asia Pacific Index rose 1.2 percent by 3:13 p.m. in Tokyo, climbing for the first time in four days as Samsung, the world’s biggest smartphone maker, added 0.5 percent. Toyota Motor Corp. led Japan’s Topix index to a 1.3 percent gain as the yen slipped a second day. Standard & Poor’s 500 Index futures jumped 0.7 percent after the gauge climbed from its longest slump in 13 months. The ringgit rallied from a 5 1/2-year low after oil in New York and London rose from the weakest since 2009.
U.S. equities rebounded yesterday as Federal Reserve minutes confirmed interest rates are unlikely to rise before late April, while European stocks jumped after a drop in euro area prices increased the odds of additional stimulus. Forecasters from Bank of America Corp. to UBS AG say there are no clear signs of an end to the rout that’s sent benchmark oil prices down more than 50 percent since June. The Bank of England is projected to hold rates steady today while reports on Europe consumer confidence and U.S. jobless claims are due.
“There’s positive momentum for equities in the short term, with Asian exporters likely benefiting from an improving U.S. economy,” Pauline Dan, a Hong Kong-based portfolio manager at Pictet Asset Management (HK) Ltd., said by phone. “We’ll probably see increasing volatility this year. Investors seem to be putting Asia’s negative macroeconomic news on the backburner but issues such as rising credit risk in China will probably haunt investors later in the year.”
Topix
The Asia-Pacific index trades at 13.4 times estimated earnings for member companies, up from 13.19 yesterday, its lowest valuation since October. The S&P 500 is at 16.4 times projected earnings and the Stoxx Europe 600 Index fetches 13.9 times estimated profit.
The Topix halted a five-day decline, with Toyota adding 2 percent. The yen weakened 0.5 percent to 119.86 per dollar following a 0.7 percent drop last session. South Korea’s Kospi gauge climbed 1.1 percent.
U.S. Exports
Taiwanese shares jumped the most in two months, with the benchmark gauge advancing 1.7 percent. Regulators are considering allowing Chinese tourists to open stock trading accounts in Taiwan by the third quarter, the Economic Daily News reported, citing Tseng Ming-chung, head of the Financial Supervisory Commission.
The Shanghai Composite Index, the world’s best-performing major index in the last 12 months, slipped 1.2 percent from a five-year high. Hong Kong’s Hang Seng Index was 0.8 percent higher, while a gauge of Chinese companies listed in the city added 0.9 percent.
A gauge of property companies led declines in Shanghai, slumping 2.8 percent. A similar measure on the Hang Seng Index was little changed, lagging behind the benchmark’s other three industries. Kaisa Group Holdings Ltd., the Chinese developer that defaulted on a loan last week after its chairman departed, can’t say if it plans to meet a bond deadline today as a local news website said lenders took steps to preserve assets.
West Texas Intermediate crude climbed 0.9 percent to $49.07 a barrel today, after gaining 1.5 percent last session. Record oil exports from the U.S. bolstered speculation a global glut that drove crude into a bear market will linger.
‘Free Fall’
Brent crude futures in London added 0.6 percent to $51.47 a barrel. The contract slumped below $50 yesterday, 57 percent less than the peak of $115.71 reached in June. UBS analysts say investors should avoid oil until the “free fall” ends. Traders are ignoring supply disruptions that would normally boost prices, ABN Amro Bank NV analysts said.
The ringgit appreciated for the first time in five sessions, climbing 0.4 percent to 3.5668 per dollar. Malaysia’s currency slid as much as 0.8 percent yesterday to 3.5862, its weakest intraday level since July 2009.
The S&P 500 added 1.2 percent to 2,025.90 in the U.S., after a five-day slump that marked its longest run of daily declines since December 2013.
Futures on the U.S. benchmark index climbed with the oil price today. A measure of energy companiesin the gauge has led declines through the last six months, tumbling 23 percent as crude plunged.
Treasuries Drop
The yield on 10-year U.S. Treasuries climbed two basis points to 1.99 percent. Some Fed members said slumping oil prices could reduce longer-term inflation expectations, while others were concerned a drop in market-based inflation measures might reflect that “such a decline had already begun.”
Most Fed officials agreed their commitment to be “patient” on raising U.S. interest rates meant there would be no increase before late April, according to minutes of the central bank’s last 2014 meeting released yesterday.
Data today may show initial jobless claims fell to 290,000 last week, economists estimate, while labor market reports tomorrow are projected to show non-farm payrolls increasing by 240,000 and the unemployment rate dropping to 5.7 percent.
The euro weakened 0.2 percent to $1.1819 after four days of losses. The 18-nation currency sank as much as 0.7 percent yesterday to $1.1802, its weakest price since Jan. 2, 2006. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major counterparts, climbed 0.1 percent and is heading for its highest closing level since at least 2005. [from here]
FTSE Outlook
Once the FTSE managed to break that 6460 resistance it managed to add a few points to test the 6500 level and look like it will probably test the top of the 10 day Raff today, around the 6520 area. There are a few resistance levels there’d also the 25ema on daily, but also the 10 day Bianca at 6534. A break above this area will however likely see a rise to the 6570ish where we have the coral line on the daily and a PRT. Above that 6626 though I don’t think it will get that high today. Interesting that 6330 has held so well since the other day as the picture yesterday morning looked pretty bleak, but maybe the opening week of 2015 won’t end up looking as bad as it could have!
Support wise, 6460 resistance now become quite good support, and we also have the 200ema on the 30minute around that area. Below that the IG pivot is 6428, with the live charts one at 6415 (slight difference as we had a bigger out of hours move). If it breaks below 6400 then the bears are back and we will likely see a drop to 6350, and 6296 – the bottom of the 10 day Bianca.