Good morning. It felt like the FTSE read my email yesterday morning as it followed the arrows with the dip, rise then the dip again, but just missed the order levels I had set up. The high was 6768, and the Bianca channel was 6774. We had a decent bounce from 6700 later in the day after falling during Yellen’s speech, and 6731 is now resistance, coupled with the daily pivot at 6728, then 6752/60 area – if the bulls break that then 6800 is still potentially achievable soon.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses after China reported the world’s second-largest economy grew in line with the government’s target.
The MSCI Asia Pacific Index (MXAP) lost less than 0.1 percent to 146.99 as of 2:32 p.m. in Hong Kong, after rising as much as 0.1 percent. Five stocks rose for every four that fell. China’s economic growth rate accelerated to 7.5 percent in the second quarter from a year earlier, a report showed today. JPMorgan Chase & Co. yesterday said second-quarter profit beat analysts’ estimates and Goldman Sachs Group Inc. (GS) reported an unexpected increase in earnings.
“The numbers are in line with the view that Chinese growth is picking up into the second half of this year,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $131 billion, said by phone. “All the signs point to growth stabilizing. Hard-landing fears continue to be misplaced.”
Federal Reserve Chair Janet Yellen indicated in testimony before U.S. lawmakers yesterday that stimulus is still required, as a separate Fed report noted valuations of some smaller social-media and biotechnology stocks appear “substantially stretched.” A “high degree” of monetary policy accommodation continues to be appropriate, Yellen said in her semi-annual address to the Senate Banking Committee.
Regional Gauges
Japan’s Topix index added 0.2 percent. South Korea’s Kospi index and New Zealand’s NZX 50 Index retreated 0.1 percent. Australia’s S&P/ASX 200 Index was little changed as Iluka gained 3.7 percent to A$8.51 and Rio Tinto advanced 1.2 percent to A$63.85.
Singapore’s Straits Times Index added 0.3 percent and Taiwan’s Taiex Index lost 1 percent.India’s S&P BSE Sensex Index advanced 0.4 percent.
Hong Kong’s Hang Seng Index gained 0.1 percent and the Hang Seng China Enterprises Index (HSCEI) of mainland Chinese stocks listed in the city slipped 0.3 percent. The Shanghai Composite Index added 0.1 percent.
China Data
China’s second-quarter GDP growth of 7.5 percent compared with 7.4 percent in the previous three months. Other data showed retail sales gained 12.4 percent in June from a year earlier and industrial production jumped 9.2 percent.
The MSCI Asia Pacific Index traded at 13.5 times estimated earnings at the last close compared with 16.6 for the S&P 500, according to data compiled by Bloomberg.
Futures on the S&P 500 were little changed today after the U.S. equities benchmark yesterday declined 0.2 percent yesterday.
FTSE Outlook
Must admit its slightly frustrating when it just misses your orders and then you have to bite the bullet and go in manually but not at the ideal level – its never easy! Today’s pivot is 6728 which has held as resistance overnight despite slightly better than forecast Chinese GDP (7.5%), and above that the 6731. If that breaks then we should manage to reach the top of the 10 day Bianca channel at 6752, though we also have the 10 day Raff at 6758. I think a short from this area later today could work, though above there 6808 is the next resistance level. Support wise, 6710 and 6701 are the main close ones, a long at 6701, stop just at 6688 for the 6758 might be a good initial play. With it being so flat around the 6720 area the EMAs lack any clear direction initially, though I am thinking an initial dip from the pivot down to those supports. If they break then we will most likely be testing the bottom of the daily channels again – 6635 and 6587 looking at Bianca. We have some Uk news out at 09:30 mainly around employment, and Yellen talking at 3pm again, this time the semi-annual testimony to house committee. Similar to yesterday I expect.