Support 5616 5578 5538 5520
Resistance 5650 5657 5665 5666 5837
Good morning.
Market Summary for Tuesday
The markets were affected by global banking issues with worries about Greece and Deutsche Bank to the fore.
As has been the pattern over the last few trading days markets try and get off to a strong start but then weaken during the day as sellers reappear.
There were some support levels around 5750 so this level will act as a focus for traders in the next couple of days, but currently 100 points below that level.
In a reverse of previous days the commodity sector sold off quite dramatically whereas safer shares were the least affected by the downturn.
There was also some bargain hunters for tech shares and tourist related shares outperformed which had been sold off recently.
US & Asia Overnight from Bloomberg
Asian stocks dropped as a week of volatile trading in global equities continued, with Japanese shares extending losses after the biggest one-day plunge since August.
The MSCI Asia Pacific Index slipped 0.9 percent to 117.06 as of 10:16 a.m. in Tokyo, poised for the lowest close since Jan. 21. Japan’s Topix index is heading toward the lowest close since October 2014. A gauge of global equities and the Nasdaq Composite Index edged nearer to a bear market, while the Standard & Poor’s 500 Index traded at the lowest since April 2014 amid declines in energy and technology shares. Crude tumbled almost 6 percent before rebounding on Wednesday.
“Contributing to the drop in oil and certainly having a large impact on the drop in equities is this growing concern about the sustainability of the recovery, the state of economic growth in China and increasingly the state of growth in the U.S.,” Russ Koesterich, global chief investment strategist for New York-based BlackRock Inc., said on Bloomberg TV. “People are getting worried about the global recession, worried about growth, which is affecting not only oil and stocks but other risky assets as well.”
The Topix slipped 1.5 percent in Tokyo as the yen strengthened. The gauge is currently trading below the lowest levels of January’s selloff. Traders are paying more attention to the volatility sweeping global markets than the Bank of Japan’s monetary easing, with the yen climbing against almost all of the more than 150 currencies tracked by Bloomberg since the central bank embraced negative interest rates on Jan. 2.
As global stocks near a bear market, volatility is on the rise, with the Chicago Board Options Exchange Volatility Index briefly touching a five-month high. The measure of market turbulence known as the VIX jumped 20 percent in the prior three days. A similar gauge for the Nikkei 225 Stock Average is at the highest level since August, jumping 30 percent on Tuesday.
Investors will be watching Federal Reserve Chair Janet Yellen as she testifies before the U.S. Congress on Wednesday. After the Bank of Japan’s surprise move into negative interest rates largely failed to assuage market concerns, Yellen will need to calibrate her commentary carefully to avoid further fueling volatility.
Australia’s S&P/ASX 200 Index fell 1.3 percent, retreating for a fourth day to the lowest level since July 2013. New Zealand’s benchmark dropped 0.4 percent. Singapore’s Straits Times Index declined 2.7 percent while the FTSE Bursa Malaysia KLCI Index was little changed, resuming trading following an extended weekend Lunar New Year holiday. Markets in South Korea, Hong Kong, China, Taiwan and Vietnam remain shut.
U.S. Futures
E-mini futures on the S&P 500 Index slipped 0.1 percent on Wednesday. The U.S. equity benchmark index fell 0.1 percent on Tuesday, after erasing a 1 percent loss and climbing as much as 0.8 percent. The Nasdaq Composite Index fell 0.4 percent after lurching between gains and losses.
Oil snapped a four-day losing streak, rebounding from the lowest close in almost three weeks before U.S. crude inventory data. Futures gained as much as 1.8 percent in New York after slumping 13 percent in the previous four sessions. U.S. industry data was said to report crude supplies climbed 2.4 million barrels last week. Government figures Wednesday are forecast to show a 2.85 million-barrel increase, according to a Bloomberg survey. [Bloomberg]
FTSE Outlook and Prediction
Well yesterday morning started off going to plan, but the bulls couldn’t quite reach the 5745 short order (failed at 5741… arghhh) and well, the next thing you know its testing 5600. The bulls defended this area pretty well as the next really major level below is 5400 (though there is some support at 5550 first). Bear that in mind. Anyway, for today, its looking like an initial rise up to the top of the 10 and 30min channels as well as the daily pivot area at 5652 to 5666, so it will be interesting to see if there are any bears waiting here as it could be a good shorting spot. If the bulls manage to break through 5666 then we could be on for a bit of a bounce for a few days and pull away from the 5600 area. If the short from this area gets stopped then it would be worth flicking to long to ride any possible bounce towards 5700+. As mentioned, if the bears do bring it down from 5666 then I am looking at a potential drop to 5580ish, maybe a bit lower. The volatility continues at the moment and its certainly a bit tricky, so stay nimble and keep the stops tight!