Support 5842 5800 5734 5720
Resistance 5861 5895 5907 5908 5928
Good morning.
Market Summary for Monday 15th February
The FT100 had another strong day on the back of gains in Asia where the Nikkei surged more than 7 percent and a stronger fix of the yuan eased devaluation concerns. Banks were among the top sectoral gainers, with sentiment helped by news that the European Central Bank (ECB) is in talks to buy bundles of Italian bad bank loans as part of its asset-purchase programme.
With Wall Street being closed most of the moves had been completed by lunchtime with the FT100 reaching the 5845 area, which it then held for the remainder of the day. The short off 5845 managed a few bear points in an otherwise bullish day. In after hours it was little changed with no other major markets open.
US & Asia Overnight from Bloomberg
Asian stocks rose, extending a rally that lifted the regional equities gauge from the lowest level since 2012, as energy and financials climbed and SoftBank Group Corp. surged.
The MSCI Asia Pacific Index rose 1 percent to 118.75 as of 12:09 p.m. in Tokyo, after falling as much as 0.6 percent earlier. The regional gauge jumped 4.1 percent Monday, the biggest advance since September. Japan’s Topix increased 1.2 percent, erasing an early loss, as SoftBank soared 16 percent after announcing a buyback plan. China stocks rose the most in two weeks after data showed the nation’s banks doled out a record amount of loans in January.
Japanese shares added to Monday’s biggest rally since October 2008 as investors speculated a global selloff had gone too far and optimism increased that the Bank of Japan will increase stimulus. European Central Bank President Mario Draghi reiterated on Monday his willingness to act should financial turmoil threaten price stability.
“There’s enough value starting to emerge in certain areas that investors eventually start to take advantage of that,” said Sean Fenton, Sydney-based fund manager at Tribeca Investment Partners. “We are starting to find a little bit of a bottom to this trading range. Central banks will try to calm the markets down a little bit and then investors will start to step back in again.”
The Topix index erased an earlier drop of 1.2 percent. The Japanese equity market has become more volatile than China, Greece and Argentina. The measure has swung more than 3 percent each day in the past five sessions as volatility in global markets gets funneled through the yen and then reflected back into the nation’s stocks.
“The Bank of Japan does have the capacity to increase its easing program as economic growth slows,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “We see some further stimulus, not only from the Bank of Japan, but also in Europe and we don’t see U.S. interest rates rising in the next six months or so.”
SoftBank surged 16 percent after the Japanese wireless carrier said it is prepared to spend a record 500 billion yen ($4.4 billion) buying back stock after its shares dropped to their lowest since buying Sprint Corp. in 2013. SoftBank will purchase as many as 167 million shares, or 14.2 percent of its stock, using cash holdings and the proceeds of asset sales.
Regional Gauges
The Shanghai Composite Index climbed 2.6 percent and the Hang Seng China Enterprises Index rose 3 percent. The Hang Seng Index gained 1.6 percent and Taiwan’s Taiex Index advanced 1.3 percent.
Speculation is intensifying that China’s government will add to monetary and policy stimulus after data on Monday showed a slide in exports. Premier Li Keqiang said that his country will take decisive actions when needed, while the Economic Information Daily reported policy makers are expected to release a package of monetary, fiscal and tax policies to ensure economic growth is in a reasonable range this year.
New yuan lending jumped to 2.51 trillion yuan ($390 billion) last month, beating the median estimate of 1.9 trillion yuan in a Bloomberg survey. The yuan strengthened Monday by the most since a dollar peg was scrapped in 2005 after People’s Bank of China Governor Zhou Xiaochuan talked up the credentials of the world’s second-largest economy.
South Korea’s Kospi index gained 1.4 percent after the central bank kept its benchmark interest rates on hold. Australia’s S&P/ASX 200 Index added 0.3 percent. New Zealand’s S&P/NZX 50 Index climbed 0.4 percent and Singapore’s Straits Times Index gained 0.6 percent.
Crude oil extended its advance, adding 4.2 percent amid prospects of a meeting between Saudi Arabia and Russia, which buoyed energy producers. [Bloomberg]
FTSE 100 Outlook and Prediction
The US returns from their day off yesterday so we are likely to see a bit of a pull back after all the rises in their absence. They do like to try and close a gap if possible. Today has initial resistance at the 5861 level for R1 (5877 R1 on live charts) so we may well get an initial dip from here down to the 5844 level where we have a green coral support line on the 10min chart. If this early support holds then I think we will pop above 5900 before a decline, as we have the 20 day Raff here, and also the daily trend line resistance. It feels like things are a bit more upbeat than they were last week and we have had a decent bounce from the 5500 level, and gold is back below $1200 for the moment. If we do get a dip down from the 5900 area then the 2 hour chart has support down at 5720 currently, whilst the daily pivot at 5800 looks a distinct possibility. We may well see quite a range today after yesterday’s fairly slow moving rise. There is also a large 24.7 point dividend tomorrow so that might temper any major short term bearishness. I have gone for a rise off the 5844 area this morning, however, if that breaks then a decline down to 5800 is likely this morning instead, before a possible bounce there.