Support 6186 6175 6159 6134 6098 6081 6079
Resistance 6204 6225 6230 6239 6241 6252
Good morning. I hope you had a good weekend. The FTSE has stayed around the 6200 level with a slight dip down to 6175 daily pivot overnight and bounced back, so will today be the day that the bulls can hold above 6200? News overnight saw China’s consumer prices remain buoyant last month on surging food prices and factory-gate deflation moderated. The consumer-price index was at 2.3 percent in March from a year earlier, matching February’s level, as food prices jumped 7.6 percent. Producer price declines narrowed to 4.3 percent from a drop of 4.9 percent in February, and posted the first month-on-month increase since 2013.
US & Asia Overnight from Bloomberg
- Japan’s stocks retreat as currency advances for seventh day
- Gold climbs to three-week high as oil near $40 boosts ringgit
Stocks and currencies rallied in Asia excluding Japan while copper prices advanced as Chinese inflation data pointed to a pick-up in industrial demand in the world’s second-largest economy.
The Shanghai Composite Index rebounded from a one-week low as a report showed producer prices increased month-on-month for the first time since September 2013. U.S. oil topping $40 a barrel for the first time this month boosted Asian energy stocks and the Malaysian ringgit, while Japanese shares retreated as the yen headed for its longest winning streak since 2012. Copper rose from its lowest close since February, gold climbed to a three-week high and wheat extended declines.
“The producer-price index number has delivered a signal that the economy is picking up,” said Wu Kan, a fund manager at JK Life Insurance in Shanghai.
Concern about the health of China’s economy drove a January stocks selloff that erased some $7 trillion of market value worldwide and Monday’s inflation figures are helping restore confidence at the same time as a rebound in oil prices supports global equities. Shares are trading the most in sync with crude since June 2013 in the run-up to an April 17 meeting at which major oil producers including Russia and Saudi Arabia are set to discuss a production freeze.
The World Bank trimmed its 2016 economic growth outlook for developing East Asia and Pacific countries to 6.3 percent from 6.4 percent on Monday, while acknowledging that the region is faring relatively well despite tough global conditions. Central bankers and finance ministers will gather this week in Washington for spring meetings of the Washington-based lender and the International Monetary Fund, as well as a Group of 20 session.
Stocks
An MSCI gauge tracking Asia-Pacific stocks outside of Japan gained 0.3 percent as of 12:52 p.m. Hong Kong time, led by gains in energy companies and raw-materials producers. The Shanghai Composite Index rallied 1.8 percent as Baoshan Iron & Steel Co. and Wuhan Iron & Steel Co. jumped more than 7 percent.
China’s producer prices rose 0.5 percent in March from February and were down 4.3 percent from a year earlier. The year-on-year decline was less than the prior month’s 4.9 percent slide and the 4.6 percent drop forecast in a Bloomberg survey.
Exporters and banks led a 1.1 percent loss in Japan’s Topix, dragging the gauge toward a two-month low. Foreign investors pulled funds from Tokyo’s stock market in the 13 weeks through April 1, dumping $46 billion of equities, as economic reports deteriorated and a resurgent yen pressured exporters.
“Yen strength is really hurting at the moment,” Steve Brice, chief investment strategist at Standard Chartered Bank, told Bloomberg TV in Singapore. “The extent of the strength we’ve seen has surprised pretty much everybody.”
Futures on the Standard & Poor’s 500 Index declined 0.1 percent, while contracts on the U.K.’s FTSE 100 Index declined 0.2 percent.
Currencies
The Bloomberg-JPMorgan Asia Dollar Index, which tracks Asia’s 10 most-used currencies excluding the yen, was headed for its highest close in five months. South Korea’s won strengthened 0.7 percent versus the dollar, the best performance among major currencies, and the increase in oil prices helped lift the ringgit by 0.5 percent. Malaysia is Asia’s only major net exporter of crude.
ING Groep NV and Commonwealth Bank of Australia — the most-accurate forecasters of Asian exchange rates for the last quarter — predict at least seven of 10 emerging-market currencies in the region will appreciate by year-end.
The yen advanced 0.2 percent, climbing for a seventh straight day versus the greenback amid a surge in bullish bets on the currency. Chief Cabinet Secretary Yoshihide Suga repeated that officials are watching the foreign-exchange market “with vigilance,” and will take appropriate action if necessary. Deutsche Bank AG and Bank of Singapore Ltd. said the yen remains at or below fair value.
“The yen is nowhere near overvalued,” making it hard to justify intervention, said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore. “Even though the yen has moved quite substantially against the dollar, you look at yen relative to euro and other currencies it hasn’t really strengthened all that much.”
Commodities
Oil rose 0.1 percent to $39.76 a barrel in New York, after surging 6.6 percent on Friday, and earlier traded above $40 for the first time this month. The jump in prices at the end of last week was spurred by data showing an unexpected drop in U.S. stockpiles and a decline in the number of active rigs in the nation. Venezuela said the first step at the April 17 meeting in Doha between suppliers including Saudi Arabia should be to cap production.
“The market has positive momentum, so there is a potential for oil to test the highs we saw a few weeks ago,” said Michael McCarthy, chief strategist at CMC Markets in Sydney. “Some sort of supply agreement in Doha seems extremely unlikely. Even if a deal were announced, the market will be extremely skeptical of any compliance.”
Gold climbed 0.9 percent to $1,252.28 an ounce, set for the highest close since March 18. Copper advanced 1 percent on the London Metal Exchange, while tin and zinc added 1.2 percent.
The monthly increase in China’s producer prices is “a sign of a pickup in industrial demand, supporting metals prices,” said Jia Zheng, chief metals analyst at East Asia Futures Co.
Wheat in Chicago fell 1.1 percent, extending last week’s 3.3 percent decline. [Bloomberg]
FTSE 100 Outlook and Prediction
We had an overnight dip to the pivot at 6175 and that has held on the first test but if we test it later and break through then I expect us to dip down towards S1 at 6134, with a pause (and possible hold) at 6160. However, initially today I am feeling rather hopeful that the 6200 level is going to hold for a bit now and we rise towards the top of the Bianca channels at the 6250 level this morning. Its been a funny few sessions, with the bears failing to build on sell offs and the bulls failing to build on repeated tests of 6200. If we do rise this morning then we have the Bianca resistance at 6250ish for both channels, as well as the 10 day Raff at 6240 as well. Should the bulls really push on and through these then 6265 is the top of the 20 day Raff and a break through that on the first test for a while is unlikely, so I would be looking at that capping any exuberant rises today. So, generally positive today, 6160 and 6135 for support, 6250 and 6265 for resistance.