Support 6155 6140 6129 6103 6091 6084
Resistance 6176 6196 6197 6200 6265
Good morning.
Market Summary for Friday 18th March 2016
The FT100 consolidated on Friday, after a week in which it has closed near 2016 highs. This is healthy and will provide some stability to the market. Having had an initial push up towards 6250 the profit takers moved in to knock it back, but only in moderation. Unfortunately from just below the 6248 short order!
Recent gainers saw the most profit taking with commodities (including gold) and housebuilders topping the losers table.
US & Asia Overnight from Bloomberg
- Commodity-linked currencies lead losses against greenback
- China signaled support for margin trade as stock angst fades
Crude oil extended declines, sparking losses among Asian commodity stocks as the dollar reasserted itself following a selloff. Chinese shares rallied amid plans to loosen margin lending curbs.
West Texas Intermediate oil fell 1.4 percent, building on losses from Friday spurred by the first increase in U.S. rigs this year. The greenback extended its rebound into a second day after slumping to a five-month low last week as the Federal Reserve pared its interest-rate outlook for 2016. Currencies from commodity exporters were the biggest casualties. With Japanese markets closed for a holiday, mining companies led declines across Asia, while Shanghai stocks headed for the longest rally since May as brokerages soared.
Speculation global policy makers will continue with unprecedented monetary easing helped the Standard & Poor’s 500 Index wipe out 2016 losses Friday, reversing the benchmark’s worst start to a year on record. Still, Goldman Sachs Group Inc. is holding fast to its bullish stance on the greenback, predicting stronger economic outcomes will force the Fed to raise borrowing costs three times this year, and the currency’s comeback is weighing on crude.
“A lot of the movement in oil recently has been dollar-driven,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The oil market needs a stronger economic performance in order to spur demand and absorb all that oil supply.”
Commodities
WTI futures fell to $38.88 a barrel as of 12:55 p.m. Hong Kong time, after sliding 1.9 percent on Friday to trim their fifth straight weekly advance to 2.4 percent. Brent crude lost 0.8 percent to $40.89 after falling 0.8 percent at the end of last week.
Rigs targeting oil in U.S. fields rose by one to 387 last week, Baker Hughes Inc. said on its website Friday, the first increase of 2016. The prior week’s number was the lowest since December 2009. The greenback’s stabilization has also unsettled oil, which is priced in the U.S. currency, along with many other commodities.
Gold for immediate delivery declined a third straight day, losing 0.3 percent to $1,251.59 an ounce, while most industrial metals attempted a rebound, with copper rising 0.1 percent in London.
Wheat futures added 0.7 percent, rising for a second session. Weather across parts of the U.S. plains over the weekend was colder than expected, raising concerns that crops may be damaged, AgResource Co. said in a report on Sunday.
Stocks
The MSCI Asia Pacific excluding Japan Index slipped 0.1 percent, snapping a two-day climb as Australia’s S&P/ASX 200 Index lost 0.2 percent and the Kospi index in Seoul fell 0.2 percent. New Zealand’s S&P/NZX 50 Index added 0.3 percent.
“We’re not seeing a lot of enthusiasm in markets given the holiday-shortened week and the strong rally that we’ve had recently,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone, referring to Easter holidays in a number of markets starting from Thursday. “We need to see more catalyst for this rally to continue. We need to see some signs growth is stable.”
In China, the Shanghai Composite Index rallied 1.8 percent in a seventh straight day of gains. Hong Kong’s Hang Seng China Enterprises Index, a gauge of mainland shares listed in the city, advanced 0.8 percent.
Margin Loans
Citic Securities Co. paced gains among brokerages after China Securities Finance Corp. said it will resume offering loans for as long as 182 days that brokerages can use to fund margin trading. Citic Securities surged 8.9 percent in Shanghai and Haitong Securities Co. jumped 6 percent.
“The correlation between margin lending and Chinese equities is highly correlated — this will be positive,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., said in an e-mail to clients.
Commentary from some of China’s leaders at the weekend indicated senior policy makers are aware of and concerned about the surge in leverage there. People’s Bank of China Governor Zhou Xiaochuan and Vice Premier Zhang Gaoli indicated at the annual China Development Forum in Beijing that they think overall lending in Asia’s largest economy is too high, just days after the national legislature said their top priority was securing annual growth of at least 6.5 percent.
Futures on the S&P 500 were down 0.2 percent after the U.S. benchmark rose 0.4 percent on Friday, bringing its fifth straight weekly gain to 1.4 percent.
Currencies
The New Zealand dollar weakened 0.6 percent, while Canada’s currency was down 0.4 percent with the South African rand. The Australian dollar slipped 0.3 percent to 75.86 U.S. cents in the wake of its third straight weekly gain. The Korean won dropped 0.1 percent following a surge last week of 2.6 percent.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, added 0.1 percent after rallying 0.3 percent on Friday to pare its retreat for the week.
Odds the Fed will boost benchmark rates by the end of 2016 have receded to 68 percent, from 77 percent a week ago, with the central bank citing concern over the impact of global market turmoil on the U.S. economy in the decision to reduce its rate-hike ambitions. [Bloomberg]
FTSE 100 Outlook and Prediction
The usual pattern has been bull Monday, bear Tuesday and despite the drop off from 6238 on Friday, the 6155 has held well so far. The S&P is at a fairly key area at 2050 now, and the Fed are looking like doing less interest rate rises than previously inferred. So whilst there is a case for a push past 2050, at the same time, the run could be running out of steam at this fairly key area. For the FTSE today, I can see an initial rise to the pivot at 6195 area, where we also have a declining 30min coral line, though there is initial resistance at 6173 to start with. The 2 hour chart is also showing some bearishness with resistance at 6200 looking at the Hull moving averages, while we are still loitering in the middle ground on the daily Raffs. Bianca trend wise there is support at 6100ish, and resistance 6265, and not sure the bulls will be able to push it up 100 today but you never know! So fairly simple plan for today really, inverted V with a rise to and then a drop off from the 6195 area, possibly to dip down as far at 6105. If the bulls break 6200 though, then I expect a rise back towards 6250 and 6265. At the back of my mind I still have my wild 6350 thought!