Good morning. Good day yesterday in the end with the dip from the SMS level then long at 6775 for the run to 6820. Didn’t quite manage to reach the top of the daily channels that I was looking for, but to be honest it seems a tall order anyway while the S&P remains below 1991. The trend is still up though, and the top of the Bianca channels are now at 6860. Would have to be a very bullish Friday to reach them today! Still, company results are still on the positive side, but 6825 remains immediate resistance. The IMF upped their latest guess of what they think the UK economy will grow by over this year, changing their mind to increase it to 3.2%, and 2.7% for 2015.
Asia Overnight from Bloomberg
Asian stocks outside Japan dropped, with a gauge of Chinese shares in Hong Kong paring its weekly advance, and U.S. futures slid. Indonesia’s rupiah weakened a second day versus the dollar, while copper trimmed a weekly gain.
The MSCI Asia Pacific excluding Japan Index slipped 0.4 percent by 12:49 p.m. in Tokyo, set for a weekly climb of 1.4 percent. The Hang Seng China Enterprises Index dropped 0.3 percent after surging 5.6 percent in three days. Standard & Poor’s 500 Index futures lost 0.1 percent and Nasdaq 100 Index contracts fell 0.2 percent. The rupiah weakened 0.3 percent as the Bloomberg Dollar Spot Index held near the highest level since June 18. Australian bonds declined and gold headed for a second weekly retreat. Copper fell 0.4 percent.
Global equities are up for a second week, after a raft of better-than-estimated earnings in the U.S. and signs of global manufacturing growth buoyed sentiment. Chinese shares may climb another 20 percent, following a 19 percent surge in the Hang Seng China Enterprises Index since March 20, said Mark Mobius, executive chairman of Templeton Emerging Markets Group. The U.S. and Canada will opposeWorld Bank projects related to Russia, to intensify pressure on the country over its actions in Ukraine.
“While valuations aren’t stretched, there will be limitations as to how far this rally can go,” Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion, said by phone. “Whenever a downward draft comes into the market, it’s likely to prove short-lived on the back of continued monetary support, valuations and an improving growth environment.”
Treasuries were little changed after falling a second day in New York, with yields down four basis points to 2.50 percent following data that showed jobless claims fell to the lowest level in more than eight years. Investors are assessing economic data for clues to the outlook for interest rates, with U.S. borrowing costs currently near zero.
The U.S. will vote against loans and investments that come before the World Bank’s board and are related to Russia, the world’s largest energy exporter, Treasury Department spokeswoman Holly Shulman said. Melissa Lantsman, a spokeswoman for Canadian Finance Minister Joe Oliver, said her country also opposes such projects. European governments are discussing doing the same, a European official said, asking not to be named because the discussions are confidential.
IMF Outlook
About 77 percent of S&P 500 members that have posted results this season have beaten analysts’ estimates for profit, while 66 percent exceeded sales projections, according to data compiled by Bloomberg. Profits probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, estimates compiled by Bloomberg show.
The International Monetary Fund lowered its outlook for growth yesterday as expansion rates from China to the U.S. weaken and military conflicts from Ukraine to the Middle East raise the risk of a surge in oil prices.
The world economy will expand 3.4 percent in 2014, the IMF said, less than its 3.6 percent prediction in April and stronger than last year’s 3.2 percent. Next year, growth will be 4 percent compared with an April forecast for 3.9 percent, the fund said.
“Global growth could be weaker for longer, given the lack of robust momentum in advanced economies” even as interest rates stay low, the IMF said in an update to its World Economic Outlook report. “Monetary policy should thus remain accommodative in all major advanced economies.”
FTSE Outlook
Todays pivot is 6803 so likely to be initial resistance there this morning, and then we have support at 6774 again today. Below that the bottom of the 10 day Bianca channel is 6762, which might be worth a small long. Resistance wise, the bulls will need to break 6825 today, with 6837 and then 6860 as the next resistance. 6860 is fairly heavy resistance as that is the top of the daily channels. Will be worth short there if seen. 6837 is the top of the 30 minute channel and more likely to be hit today, if the bulls break the pivot. The trends are still up, though the S&P has failed to really push on since closing at its record highs.
I think he pivot will break this morning, for a run to the top of that channel before dropping back. But its Friday, so stay nimble!