Support 5608 5604 55815579 5494 5476
Resistance 5645 5647 5650 5681 5717 5766
Good morning.
Market Summary for Wednesday
After a bumpy opening the FT100 ground its way up during the day on a reassuring statement from Deutsche Bank which helped the banking sector and markets overall.
A statement from the FED caused a small blip down near the Wall Street open but then the FT100 rose again during the afternoon before falling back slightly into the close at 4:30pm. Financials were among the best performers with gold and commodities the weakest.
Chair Janet Yellen said the Federal Reserve still expects to raise interest rates gradually while making it clear that continued market turmoil could throw the central bank off course from the multiple increases that policy makers have forecast for 2016.
“Financial conditions in the United States have recently become less supportive of growth,” Yellen said in testimony prepared for delivery Wednesday before the House Financial Services Committee in Washington. “These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market.”
US & Asia Overnight from Bloomberg
Asian stocks fell as markets in Hong Kong and Seoul joined a global selloff in their first day of trading this week.
The MSCI Asia Pacific Excluding Japan Index dropped 1.2 percent to 367.19 as of 9:35 a.m. in Hong Kong. Markets in mainland China, Japan, Taiwan and Vietnam are closed for holidays. The Hang Seng Index slumped 4.1 percent in Hong Kong, while South Korea’s Kospi index tumbled 2.5 percent. A gauge of worldwide equities slid 2.3 percent in the first three days of the week amid concern about the outlook for the global economy and as oil extended its slide.
“We’re seeing a contagion from what’s been going on in the last three days in global markets,” Tim Condon, head of Asian research at ING Groep NV in Singapore, said by phone. “This is the first day South Korea and Hong Kong are registering a sort of reaction to that. It’s a huge down day. Financial markets are repricing for a global growth slowdown. Expectations that monetary policy would be able to do much have diminished considerably.”
Federal Reserve Chair Janet Yellen on Wednesday highlighted uncertainty over the pace of China’s growth and the related rout in commodities, concerns that have roiled financial markets throughout the year and twice pushed global shares to the brink of a bear market. Yellen told Congress the Fed still expects to raise rates gradually while making it clear that continued market turmoil may alter its forecasts. Her dovish-sounding comments weren’t enough to boost U.S. equities.
The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong slumped 5.1 percent on Thursday.
The Kospi index is trading for the first time since North Korea launched a long-range rocket on Feb. 7. South Korea is pulling out of an industrial complex jointly run with North Korea, taking aim at their last remaining symbol of economic cooperation to punish leader Kim Jong Un for a recent nuclear test and rocket launch.
Australia’s S&P/ASX 200 Index added 0.2 percent, after falling into a bear market on Wednesday when it plunged to its lowest level since July 2013. New Zealand’s S&P/NZX 50 Index lost 0.4 percent, while Singapore’s Straits Times Index slipped 1 percent.
Markets in mainland China, Taiwan and Vietnam remain closed for the rest of the week, while those in Japan will resume trading on Friday.
E-mini futures on the Standard & Poor’s 500 Index fell 0.7 percent after the underlying U.S. equity benchmark index closed down less than 0.1 percent on Wednesday, with gains of as much 1.6 percent evaporating in the final hour of trading.
Crude oil futures fell below $27 a barrel on Thursday after after dropping 15 percent the previous five sessions. [Bloomberg]
FTSE Outlook and Prediction
We had a quick foray below 5600 overnight but the algo’s managed to drag it backup above, however it still looks pretty weak. That said, I can see a possible bounce up to the 5645 area, where we have a couple of decent looking resistance levels and an area that is probably worth a short. The bulls can’t seem to make any of their rises stick at the moment, especially harder with so much negative sentiment around, as well as a dose of fear about the markets/economy/debt/interest rates/oil/commodities/company profits/war/etc! Anyway, we have the daily pivot at 5645, as well as the coral trend line on 30min which has just turned to bearish (short term trend is down that means). If 5600 breaks then there is quite a lot of fresh air below and we are looking at a possible dip to 5400. Oil has continued its slide from the $35 area, and still looks like we will dip to $16, though whether it actually does remains to be seen. I’m like a broken record on that oil price! Sorry. So, an initial second test of the 5595 area is likely to hold I think, as the bulls will want to keep us above 5600 if possible, though a third test later today is likely to break I feel. On the flip side, if the bulls can break 5645 then short term crisis averted and a rise to 5766 is possible, where we have the top o0 the 10 day Bianca channel.