Good morning. Naughty spike up first thing yesterday before the dip , which exceeded the 6706 pivot but didn’t quite reach the 6721 shorting area, however during the course of the day we got the decline to 6645 at around 7pm. The gold trade worked out better yesterday with the short off 1352 closing at 1340, good job too as its climbed strongly since as a flight to safety takes place. The FTSE still looks weak for the moment and is most likely going to test the bottom of the Bianca 10 day at 6623. Maybe even 6550 soon (bottom of the Raffs)!
Asia Overnight from Bloomberg
Asian stocks fell, with the regional index headed for a three-week low, oil dropped and emerging-market and commodity-linked currencies weakened amid concern thatChina’s economy may be faltering. Gold advanced and copper traded near its lowest since July 2010.
The MSCI Asia Pacific Index tumbled 1.5 percent by 3:31 p.m. in Tokyo, set for the lowest close since Feb. 20 as a gauge of Chinese stocks in Hong Kong slid 1.9 percent. Standard & Poor’s 500 Index futures were little changed. The yen traded at 102.87 a dollar after gaining versus major peers yesterday and gold rallied 0.9 percent. The Australian dollar fell with currencies from South Korea to Malaysia. Oil in New York slid 0.6 percent amid signs of rising U.S. inventories, while copper futures were little changed at $6,469.75 a ton.
Most major equity indexes in Asia declined as the suspension of a Shanghai-listed company’s bonds from trading underscored risks in China’s financial markets less than a week after the country’s first onshore default. At the same time, disappointing data on the world’s second-largest economy has fueled a rout in base metals this week as lawmakers discuss policy in Beijing. Russian stocks fell after Germany told the country to switch course on Crimea or risk more sanctions.
“The concern is that Chinese growth is still slowing,” said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd. in Sydney, which oversees $131 billion. “The risk is this little correction could linger a little bit longer. The markets remain vulnerable to bad news regarding China and the Ukraine.”
Gold
Gold, regarded as a safe-haven investment along with the yen, traded at $1,360.72 an ounce after climbing 0.7 percent yesterday. Platinum rose 0.5 percent and silver jumped 1.6 percent.
“Investors rushed the classic safe-haven option as concerns swirled about the stability of China’s financial system,” Tony Farnham an analyst in Perth at Patersons Securities Ltd., wrote in an e-mail to clients. The Ukraine crisis “continues to bubble away just below the surface, just like any good volcano.”
Crude
West Texas Intermediate crude fell as much as 0.9 percent to $99.18, dropping for a third day, after an industry report showed crude inventories rose in the U.S., the world’s biggest oil consumer. An Energy Information Administration report today may show stockpiles expanded by 2 million, according to a Bloomberg News survey.
Ukraine
Russia is standing by deposed Ukrainian President Viktor Yanukovych and called possible U.S. aid to the new government in Kiev illegal, as the standoff with Western governments over Crimea intensified. Ukraine says its neighbour has put as many as 19,000 troops in the region.
FTSE Outlook
Frankly, the FTSE looks weak for the moment, with a downtrending channel on the 30 minute and a break through the 6645 support mentioned yesterday. With gold rising strongly and breaking that 1352 there is a definite flight to safety going on, as well as hardly any divi hunters coming out last night, despite a large 20 point divi.
For today it looks very likely that we will test the bottom of the 10 day Bianca at 6623, whilst both the Raff channel bottoms are at 6562ish – so if that 6623 were to break then that is likely to be the next major support level, certainly around that area anyway. With todays pivot at 6688, the bulls will need to break that level to have any hope of upside for the near term. However, it looks like the S&P has further to fall – 1852ish – which will mean a bit more weakness for the FTSE. Whether that means a bounce at 6623 or 6570 remains to be seen, but for longs with tight stops those are the areas I am looking at.