Support 6198 6140 6131 6077 5962
Resistance 6228 6243 6252 6282 6294
Market Summary for Tuesday 1st March 2016
Earlier in the day, the market got support after China’s manufacturing sector shrank more sharply than expected in February, raising hopes that authorities in Beijing would announce further stimulus measures. A case of “Bad news is good news”!
Later U.S. factory and housing data came in better than expected and oil prices rose giving a further leg up to the markets.
The leading sector was Insurers on good trading statements and the weakest were banks (on poor figures from Barclays) and a some commodities including gold.
US & Asia Overnight from Bloomberg
- Copper leads gains in industrial metals as crude oil falls
- Share indexes jump more than 2% in Australia, China, Japan
A global equities rally gained momentum in Asian trading and emerging-market currencies strengthened as economic data from the U.S. and Australia spurred risk-taking. Copper rose and gold fell.
Asian stocks jumped the most in two weeks, led by gains in Japan. Australia’s dollar rose against all major peers and its bonds tumbled as economic growth beat estimates. The offshore yuan weakened after China’s central bank lowered the currency’s reference rate and Moody’s Investors Service cut the outlook on the nation’s credit rating. Oil fell for the first time this week after data showed American stockpiles increased. Standard & Poor’s 500 Index futures advanced as results of the so-called Super Tuesday U.S. presidential candidate contests came in.
“We are getting a bit of stability in markets,” Nader Naeimi, head of dynamic markets at AMP Capital Investors Ltd. in Sydney, which oversees about $115 billion, said by phone. “Most of the panic is behind us. People are underestimating just how much ammunition central banks have. U.S. growth is slow but steady.”
American factory activity in February shrank less than forecast, data last session showed, burnishing the outlook for the world’s largest economy as China loosens monetary policy to revive growth in the second-biggest. While global stocks are recovering from a four-month losing streak, elevated prices for haven assets including U.S. Treasuries, gold and the yen are a sign many investors have yet to be convinced that the rally will be sustained.
MSCI Inc.’s world equity index has gained almost 8 percent since sinking to a 2 1/2-year low in the middle of last month, spurred by oil’s rebound from the lowest price in more than decade. It’s still down about 5 percent for the year.
Stocks
The MSCI Asia Pacific Index surged 2.9 percent as of 11:54 a.m. Tokyo time, headed for its highest close in almost two months, as all 10 industry groups advanced. Japan’s Topix jumped 3.8 percent, Hong Kong’s Hang Seng Index climbed 2.6 percent and the Shanghai Composite Index rose 2.3 percent.
China Resources Beer (Holdings) Co. soared as much as 35 percent in Hong Kong after agreeing to buy out the remaining stake in Snow Breweries, its Chinese joint venture with SABMiller Plc, for $1.6 billion. The deal will help smooth the way for Anheuser-Busch InBev NV’s takeover of SABMiller.
S&P 500 Index futures rose 0.2 percent following the U.S. benchmark’s 2.4 percent surge last session. Hillary Clinton dominated Democratic Party primary contests held on Tuesday, beating rival Bernie Sanders, and Donald Trump boosted his chances of securing the Republican Party presidential nomination.
A surprise, strong showing for Sanders “would have upset markets” by reducing the likelihood of Clinton becoming the next president, Lim Say Boon, chief investment officer at DBS Bank Ltd. in Singapore, wrote in a report. The Super Tuesday results are being seen as “an outcome for continuity over the disruption threatened by Trump and Sanders,” he said.
Currencies
The Aussie strengthened for a third day, climbing 0.8 percent versus the greenback. Australia’s commodity-dependent economy expanded 0.6 percent in the fourth quarter from the previous period, faster than the 0.4 percent growth forecast in a Bloomberg survey.
Indonesia’s rupiah advanced for the 10th day in a row, the longest winning streak in six years. India’s rupee climbed for a fourth day, its best run of gains this year.
The yuan weakened 0.07 percent in offshore trading after the People’s Bank of China cut its daily reference rate for the currency to a four-week low. The onshore rate rose 0.04 percent. Moody’s cited the drop in China’s foreign-currency reserves and increasing government debt for its decision to cut the outlook on the country’s Aa3 credit rating to negative from stable.
Bonds
Australia’s 10-year bonds tumbled, pushing their yield 12 basis points higher to 2.47 percent. The rate on similar-maturity U.S. Treasuries was little changed at 1.83 percent, after surging nine basis points on Tuesday.
Commodities
Crude oil fell 1.5 percent to $33.90 a barrel, retreating from an eight-week high. U.S. inventories rose by 9.9 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is also forecast to show supplies expanded, keeping stockpiles at the highest level in more than eight decades.
“Any rally that we see will be subdued because of the large crude inventory,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We really need to see production cuts if we’re going to get any sustained gain in oil.”
Copper led gains in industrial metals, rising 0.8 percent in London. Codelco, the world’s biggest copper producer, expects a global surplus will persist through next year and recent price gains are unlikely to be sustained, Chairman Oscar Landerretche said in an interview. Glencore Plc Chief Executive Officer Ivan Glasenberg said Tuesday that he now sees commodity prices bottoming.
Gold for immediate delivery fell 0.4 percent to $1,227.60 an ounce. It’s still up 16 percent for the year and reached a 12-month high of $1,263.48 in February. [Bloomberg]
FTSE 100 Outlook and Prediction
We have managed to test and hold above the 6200 area overnight, helped by the bullish Asia session. I am expecting a test of the 6230 area next which is where we have the 10 day Bianca channel top, and also R1 for today. Support initially is just below 6200 so a long here to start the day should work well. If the bears defend the 6230 are then a dip down towards 6140 looks likely as we have the 100 Hull MA on the 2 hour which has been good support recently. The thought of stimulus has certainly helped the markets push on from that 5500 low the other week, and the pullback to 5850 last week, and is still looking pretty bullish. I have plotted the blue arrows on the chart as my preferred route for today but if the bulls break 6230 then I expect us to reach 6282 (pink arrows) before a leg down from there instead. This is R2 and also the top of that rising 30min channel.