Good morning, fairly quiet on the FTSE since the open last night, dropping back from that 6682 resistance area mentioned on Friday. We have the US closed today for a bank holiday so its more than likely to be a fairly quiet day all round. Gold continues to climb very well, and that 1340 area looks very likely now. There is quite a bit of UK news out this week including the inflation report with it likely to drop below the 2% target, on a stronger pound, weaker commodity types and widespread deflation. The latter of which I imagine they will be wanting to avoid! A deflationary spiral isn’t much good for anyone. We also have jobs news out this week expecting to show another drop in benefit claims, and public borrowing figures, expected to be a surplus of £7.5bn in January.
Now Carney has disconnected interest rates to employment (that peg didn’t last long!), the new tie is that the UK recovery must be on track before rates will rise. Mr Carney said the country had enjoyed a “consumer-led recovery” but that businesses must begin investing at a much greater rate for him to be convinced the time is right to raise rates. “The key to this recovery sustaining itself is going to be around business investment,” said Mr Carney in an interview on the BBC’s Andrew Marr Show. Will probably be something else by the time comes anyway!
Asia Overnight from Bloomberg
Asian stocks rose, with a regional benchmark index poised to advance for the eighth time in nine days, after China’s new credit increased to a record in January, boosting optimism the world’s second-largest economy can maintain its growth momentum.
The MSCI Asia Pacific Index added 0.9 percent to 136.50 as of 3:08 p.m. in Tokyo, with more than two shares rising for each that fell. The measure climbed 1.6 percent last week as trade data from China beat estimates and Janet Yellen’s first official address as head of the Federal Reserve buoyed optimism about the U.S. economy.
“There’s optimism in the market,” Desmond Chua, an analyst at CMC Markets in Singapore, said by phone. “Record credit growth in China should offset recent concerns the economy is slowing down. Investors are looking forward to additional monetary stimulus in Japan as the government tries to counter the negative effect of the higher consumption tax in April.”
South Korea’s Kospi index increased 0.3 percent. Australia’s S&P/ASX 200 Index advanced 0.5 percent. Taiwan’s Taiex index and New Zealand’s NZX 50 Index both added 0.1 percent. Singapore’s Straits Times Index climbed 0.9 percent. Hong Kong’s Hang Seng Index jumped 1 percent, while China’s Shanghai Composite Index rose 0.6 percent.
China Lending
Chinese aggregate financing, the broadest measure of credit in the world’s second-biggest economy, was 2.58 trillion yuan ($425 billion) last month, the People’s Bank of China said in a Feb. 15 statement. The data, while suggesting China can limit the scale of a slowdown, contrast with a central bank call last month for lenders to control surging loans and highlight diminishing economic returns from credit growth.
Cautious Outlook
“At this stage we remain cautious,” Angus Gluskie, who helps oversee about $550 million as a fund manager at White Funds Management in Sydney, said by phone. “The rally that we’ve seen in the past week has been very rapid and that could sometimes be problematic. We’d like to see a bit more data.”
The Standard & Poor’s 500 Index gained 0.5 percent on Feb. 14 as earnings overshadowed weaker-than-estimated U.S. jobs and factory data last week. The U.S. market is closed today for a holiday.
The Fed’s Yellen said last week that U.S. growth has strengthened and that only a “notable change in the outlook” for the economy would prompt policy makers to slow the pace of cuts to the central bank’s monthly bond-buying program.
FTSE Outlook
A fairly flat day on Friday really, and likely to be a repeat today with the US closed. As mentioned in the Dax section above, I expect a flat to slightly bullish day. we have a decent 30 minute channel in play with support at the 6660 area, which is also today’s pivot. The 10 minute chart has a decent channel too, with resistance at 6673, so bulls will need to break that level first to reach 6693. I expect we will see 6710 today, a level that could look good for a short if seen. The tops of the Bianca channels are back in play now so flagging up areas to watch for – 6755 for the 20 day and 6781 for the 10 day channel as resistance areas.
Initially the big battle will be which goes first 6673 or 6660, I think the bulls will be in charge today, but an initial dip off the 6673 is likely. If the pivot were to break then next support is the 200ema at 6653 (and also the bottom of the Bianca 10 day at 6657) then 6630. The bottom of the 10 day Raff is 6608.