Support 5567 5551 5540 5500 5436 5403
Resistance 5585 5605 5620 5661 5663 5696
Good morning.
Market Summary for Thursday
Another day of falls which were again aggravated by worries over the banking system and world economic growth.
The speeches by the FED’s Yellen yesterday and today appeared hesitant and lacking clarity which also did little to give investors confidence.
The sector to suffer most was clearly financials, with gold the standout sector to the upside as investors ran for cover into safe assets.
After an initial big fall near the open the FT100 tried to claw back during the day only to hit more selling into the close – which is never a particularly good sign. News alerts last night confirmed that global markets have now officially entered a bear market.
US & Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index heading for its biggest weekly decline in a month, after global equities sank into a bear market and Japanese shares extended losses as the yen strengthened.
The MSCI Asia Pacific Index dropped 1.7 percent to 114.50 as of 9:11 a.m. in Tokyo. The gauge is headed for a 4.9 percent decline this week. The Topix index slipped 4.1 percent as the market resumed trading following Thursday’s holiday. Combined losses in U.S. and European equities dragged the MSCI All-Country World Index down 20 percent from a record reached in May, the common definition of a bear market.
Central bank activity remained in focus as negative interest rates have eclipsed investor worries over China’s fading economy and the near two-year collapse in oil prices. Sweden lowered interest rates that are already below zero, about two weeks after Japan shocked markets by imposing negative rates in a bid to quell the turmoil. Investors ignored a second day of testimony from Janet Yellen, whose indication that the Federal Reserve won’t rush to raise benchmark interest rates in the face of global ructions failed to stem the selloff in risk assets.
“Markets are losing faith in the central banks and their ability to stabilize the situation,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said by phone. “Central banks will have to think of unconventional policies they can implement. The global economy is extremely weak.”
The Topix is trading at the lowest level since October 2014, poised for its biggest weekly decline since October 2008 as the yen traded near a 15-month high. Bank of Japan Governor Haruhiko Kuroda will speak in parliament later today. South Korea’s Kospi index fell 0.5 percent. New Zealand’s S&P/NZX 50 Index lost 1.2 percent. Australia’s S&P/ASX 200 Index slid 0.8 percent.
Futures on the Hang Seng Index slipped 1.4 percent in their most recent trading, while those for the Hang Seng China Enterprises Index lost 1.6 percent. Hong Kong stocks fell Thursday in their worst start to a lunar new year since 1994 as the global equity rout deepened. Markets in mainland China, Taiwan and Vietnam remain closed for the holidays.
E-mini futures on the Standard & Poor’s 500 Index climbed 0.3 percent on Friday after the underlying U.S. equity benchmark index finished 1.2 percent on Thursday.
West Texas Intermediate oil jumped as much as 4.7 percent Friday in New York. The contract slumped 4.5 percent on Thursday as crude stockpiles at the delivery point for New York futures expanded to a record. [Bloomberg]
FTSE Outlook and Prediction
We have had a decent bounce so far off the 5500 level tested yesterday and the 30min chart looks bullish to start things off today. The problem is that we have been here before this week and by 07:15 its gone all bearish and drops 100! There is certainly a lot of panic and fear out there at the moment, most of it justified, and with markets now officially entering a bear market (20% off their highs) the average Joe is going to start getting a bit concerned. However, just taking the contrarian view for a moment there is pretty good support showing at 5540ish for today so worth a long here on any dip down to that level. There is the top of the falling 30min channel at 5600 so the bulls will be keen to break this level going into the weekend. Below 5540 then we have the 5500 level again, and then 5436 for the bottom of the 10 day Bianca, followed by 5400 where we have the Raffs. So, any weakness from the bulls today and we are looking at steep declines again. That said, I think the bulls are waiting in the wings for the news flow to start being a bit more positive. We have a load of data out today on retail and GDP figures so I wouldn’t be surprised if we get a decent rally shortly. News flow usually is 2 weeks negative, 2 weeks positive at the moment. With the markets the way they are at the moment its makes pinning your colours to the mast extremely hard, as the picture is changing quite rapidly but I think a long around the 5540/5550 area today could work out well if we dip down to that.