Good morning. FTSE is being very odd this week and yesterday continued that trend. Its certainly making itself very hard to trade! S&P isn’t much better either! Anyway, we had a dip to near the 6480 then a rise to the pivot and then that was it, we stayed around 6500 for the rest of the day. Things moved a bit more in the evening when the price dropped to test that 6480 level properly, and from where we have had a bounce. Judging from the emails some of you kept the order for that level which has now taken. Nice to wake up to a +20 on that too (the target originally was 6511, but might be a better one to trail the stop on if you still have it open). Today is NFP news day so likely to be slightly more choppy around 13:30 as yet again the headline will generate tapering thoughts – will they won’t they and when? Of course the bottom line is that they will taper, that’s a given, and most likely it will be slowly reduced rather than stopped in one go. I still reckon that will start in Q2 next year, provided that data still warrants it. Still, the soon global economies can stand on their own two feet the better.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses, with the regional benchmark index set for its biggest weekly drop since August, as improving U.S. economic data fueled speculation the Federal Reserve may bring forward stimulus cuts.
The MSCI Asia Pacific Index added 0.2 percent to 139.76 as of 2:01 p.m. in Hong Kong, after falling 0.1 percent. The gauge is heading for a 1.6 percent decline this week, the most since the five days ended Aug. 23. Fed policy makers meet Dec. 17-18 after minutes of their October gathering showed they may reduce $85 billion of monthly bond buying should the U.S. economy improve as anticipated.
“We’ve seen a very good string of economic data from the U.S. in recent weeks and that suggests we’re getting closer to a Fed tapering,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, said by phone. “Although the general consensus is for tapering to happen in 2014, the chance of a December tapering have gone up. That will drag equity markets weaker and push bond yields higher.”
The U.S. posted the fastest annualized growth last quarter since the start of 2012 and jobless claims unexpectedly fell as the focus turns to today’s November non-farm payrolls, projected to rise by 185,000 workers. Malaysia said today exports rose more than expected, while protesters in Thailand have said they’ll resume rallies against the government.
U.S. GDP
Futures (SPA) on the S&P 500 added 0.2 percent today. The gauge slid 0.4 percent yesterday, falling for a fifth day, as improving economic data boosted bets the Fed will cut stimulus sooner than estimated. In a Bloomberg Global Poll Nov. 19, four of five investors said they expected the Fed to put off a decision to start reducing its bond buying until March 2014 or later.
U.S. gross domestic product climbed at a 3.6 percent annualized rate in the third quarter, up from an initial estimate of 2.8 percent and the strongest growth since the first quarter of 2012, data showed. Claims for unemployment benefits decreased 23,000 to 298,000 in the week ended Nov. 30, after the median forecast of 41 economists surveyed by Bloomberg called for an increase to 320,000.
A report today is expected to show the U.S. unemployment rate fell to 7.2 percent last month to match the lowest level since 2008. Payrolls rose by 204,000 workers in October.
FTSE Outlook
I mentioned yesterday that if 6480 holds then we could get a bit of a bounce. I thought we would test that level first thing, instead we tested last thing, but it has held so far. The Bianca trends are now showing 20 day channel support at this level too, though granted the 10 day channel is still pointing to more downside.
As I have been writing this is jumped a bit too and broken through the daily pivot resistance at 6501 so its certainly generated some bullish interest by holding that level. De3cember has been pretty messy so far, and a bloodbath for bulls, but if this level does hold then it looks a bit better. As has been the case for a while the major indices are at possible bounce areas, which could mean the FTSE climbs back as well. Initially today it will need to break 6510 to have a better foundation for a rise, which opens up 6530 the 6556 (top of the 10 day Bianca channel and 20 day Raff). There is a fair bit of resistance at this level though. Dax, FTSE and S&P all look good for an early push higher but it might be short lived.