Good morning. A bit of a messy, tight range day again yesterday, with the initial drop going to plan, but the 6610 long getting stopped out. It did bounce, but just from a bit lower but failed to break the 6633 area of resistance set the other day. It still looks like it will head higher, and probably test the top of the Bianca channels, 6694 today, before reversing but certainly seems to be making hard work of it. I still have a slightly long bias for today though the past 2 days have been hard having any sort of bias at all! Yesterdays news that unemployment was up to 6% was tempered by the fact that pay growth was above inflation for the first time for 5 years.
Asia Overnight from Bloomberg
The yen slid and Japanese shares gained amid speculation Prime Minister Shinzo Abe will call a snap election. Australia’s dollar fell and Brent crude oil extended its decline below $80 a barrel.
Japan’s currency weakened 0.2 percent by 2:43 p.m. in Tokyo and the Topix index climbed 0.8 percent after a report that Abe has decided to call an election. The Hang Seng Index fluctuated as Tencent Holdings Ltd. (700), China’s biggest online messaging operator, pared losses after missing earnings estimates. The Aussie slid 0.2 percent after a central bank official said it hasn’t ruled out intervention to weaken the currency. Oil dropped amid concern OPEC won’t cut output to ease a glut.
Growth in Chinese retail sales and industrial output was weaker than economists estimated in October, data showed. Speculation is mounting in Japanthat Abe will seek a mandate to delay a planned sales-tax increase while Germany reports on inflation today. Kuwaiti Oil Minister Ali Al-Omair said OPEC won’t cut production at its Nov. 27 meeting, even after oil slid into a bear market.
“People are looking for the next story, whether it’s M&A activity or some good economic numbers,” Tony Farnham, a Sydney-based strategist at Paterson Securities Ltd., said by phone. “Investors are looking for a bit more clarity on how Europe is going to go about its version of quantitative easing. Valuations, particularly in the U.S., are looking a little bit pricey.”
Vote Decision
Standard & Poor’s 500 Index futures were little changed after the gauge slipped from a record. The Dow Jones Industrial Average declined 2.7 points, or less than 0.1 percent, to 17,612.20. Both gauges closed at all-time highs on Nov. 11. About 5.9 billion shares traded hands yesterday, 8.7 percent below the three-month average.
The yen slid to 115.76 per dollar after rising 0.3 percent last session from a seven-year low. Twenty-six of the 33 industries on the Topix advanced after Jiji news reported that ruling Liberal Democratic Party lawmaker and former party vice president Tadamori Oshima said Abe has “finally made his decision and chosen to go the people.”
China’s retail sales probably expanded 11.6 percent in October from a year earlier, a pace unchanged from September, according to economists surveyed by Bloomberg before today’s data. Factory output in the world’s second-largest economy grew 8 percent from a year earlier, also steady from the previous month, another survey showed.
The Hang Seng Index added 0.2 percent after three straight days of advance, and a gauge of Chinese companies listed in the city climbed 0.3 percent. Tencent, operator of China’s most popular messaging service, erased a drop of as much as 3.5 percent after announcing a surprise profit drop amid slowing revenue growth.
Brent Declines
The S&P/ASX 200 Index in Australia lost 0.4 percent and New Zealand’s NZX 50 Index weakened 0.5 percent, sliding for the second day after closing at a record on Nov. 11. Both countries count China as their biggest trading partner.
Brent oil fell as much as 0.6 percent to $79.88 a barrel in London after touching its lowest price since September 2010 yesterday. The contract for December delivery, which expires today, slipped 0.4 percent to $80.08. West Texas Intermediate crude dropped 0.1 percent to $77.12 a barrel, set for its lowest settlement price since 2011.
Supplies Swell
The U.S. Energy Information Administration cut its 2014 and 2015 crude price forecasts in its monthly Short-Term Energy Outlook yesterday and is due to release weekly stockpiles data tomorrow. Inventories in the U.S., the world’s biggest oil consumer, probably rose by 1.1 million barrels in the week to Nov. 7, according to energy analysts surveyed by Bloomberg.
Organization of Petroleum Exporting Countries members Saudi Arabia and Kuwait have resisted calls to lower output, while Libya, Venezuela and Ecuador have asked for action to prevent further price declines.
Australia’s currency weakened to 86.99 U.S. cents after Reserve Bank of Australia Assistant Governor Christopher Kent said the Aussie is still too high relative to fundamentals and intervention hasn’t been ruled out.
Gold for immediate delivery fluctuated after falling as much as 0.5 percent to $1,156.72 an ounce. Silver lost 0.1 percent to $15.6704 an ounce, while platinum was little changed.
FTSE Outlook
Today’s pivot is 6610 so we have initial support there, though to push on the bulls will need to break 6633, with the first hurdle then at 6652. There is a pretty steep rising channel on the 30minute that also has the same support so could well be the channel to play today, for a rise today and tomorrow to test that 6690 area, where I think a reversal will occur. Ideally it will hit that today as it is todays channel top. Above 6690 is the 20 day channel top at 6715. Support wise, 6571 and 6568 are the bottom of the Bianca channels, both looking possible if 6595 breaks. So, basically, I think we are long till 6690 (while I have been typing this, China have just opened up funding to small banks too which has created an early jump), with pauses at 6652 and 6670 (top of the 30 minute channel). 6690 could be a good shorting area to flip and reverse.