Good morning. The FT100 was dragged lower by the ongoing weakness in the oil price and forecasts of weak global economic growth next year. Brent crude oil slid back towards 11-year lows as Saudi Arabia reiterated a commitment to keep pumping oil at current levels. This negatively affects many oil producers especially those with high production costs such as the oil produced in the US by fracking which has a breakeven price of around $40 per barrel. With Saudi Arabia production costs of $10-$20 per barrel they will be able to keep going at this rate and still make a profit while American shale oil producers may have to consider postponing production until prices are above $40-$50.
Stock markets in general are just marking time during the holiday period with most big players back at the start of the year.
6320 did prove to be a level too far today and so this will have to be a target for early January 2016.
US & Asia Overnight from Bloomberg
Asian stocks were poised for the first back-to-back annual declines since 2002 as decelerating Chinese growth and the rout in commodities sent equities tumbling during the year to underperform benchmark gauges in Europe and the U.S.
The MSCI Asia Pacific Index headed for a 4.3 percent drop this year, compared with a 0.2 percent advance for the Standard & Poor’s 500 Index and a 7.4 percent increase for the Stoxx Europe 600 Index. The gauge was little changed in light trading on the final day of the year, rising 0.1 percent to 131.91 as of 3 p.m. in Hong Kong, as energy shares followed a decline in crude oil.
“This year has been a very volatile and difficult year as the markets were assaulted by volatility from different asset classes,” Kelvin Tay, regional chief investment officer at UBS’s wealth management business in Singapore, said by e-mail. “The sharp selloff in the commodities market badly affected the Asian currency markets, especially Southeast Asian currencies and equities. China’s economy will have a soft landing in 2016.”
After outperforming global shares in the first six months of the year, with the benchmark regional index touching the highest level since 2008, Asian equities slid in the second half on China’s surprise yuan devaluation and investor concern about the Federal Reserve’s interest-rate outlook. Policy makers raised U.S. rates this month for the first time in almost a decade and signaled gradual tightening in 2016.
Energy and raw-material producers led declines on the MSCI Asia Pacific Index in 2015, dropping at least 15 percent, as sentiment has turned negative after a decade-long bull market that was driven by China’s hunger for crops, metals and fuel. Producers rushed to meet that demand, resulting in expanded supplies that are now causing gluts as the world’s second-largest economy grapples with the weakest growth in a generation.
Downgrade to Junk
Noble Group Ltd. led losses on the regional gauge, dropping almost two-thirds of its value. Asia’s top commodity trader plunged following attacks on its finances by critics including the anonymous Iceberg Research and short-seller Muddy Waters LLC that culminated in Moody’s Investors Service downgrading its credit rating to junk this week. Macau casinos MGM China Holdings Ltd. and Wynn Macau Ltd. tumbled more than 50 percent each as China’s anti-corruption drive dragged gaming revenue in the former Portuguese enclave.
China’s gross domestic product will slow from an estimated 6.9 percent growth rate this year to 6.5 percent next year, according to a Bloomberg survey. The nation’s manufacturing sector probably contracted for a fifth straight month in December, according to the median forecast of analysts in a separate Bloomberg survey. The official purchasing managers index is due to be released by the National Bureau of Statistics on Jan. 1.
The Shanghai Composite Index slipped 0.9 percent on Thursday, finishing with an advance of 9.4 percent for the year. That contrasts with a 19 percent slump for the Hang Seng China Enterprises in Hong Kong. The gauges diverged this year for the first time in a decade after the government intervened to support shares in Shanghai and Shenzhen and foreign investors turned bearish on the nation’s earnings prospects.
Markets in Japan, Indonesia, Korea, Philippines and Thailand were closed for holidays Thursday while those in Australia, New Zealand, Hong Kong and Singapore had shortened trading.
Worst Performers
Australia’s S&P/ASX 200 Index fell 0.5 percent on Thursday, with trading volumes 49 percent below the 30-day average for the time of the day. The gauge slipped 2.1 percent this year, with BHP Billiton Ltd., the world’s biggest mining company and the nation’s top oil producer, as the biggest drag.
Singapore and Hong Kong are Asia’s worst performing developed markets in 2015, with the Straits Times Index slumping 14 percent and the Hang Seng Index sinking 7.2 percent. Taiwan’s Taiex index declined 10 percent. New Zealand’s S&P/NZX 50 Index climbed 14 percent.
E-mini futures on the S&P 500 Index were little changed on Thursday. The U.S. equity benchmark slipped 0.7 percent on Wednesday as energy companies dropped and a slide in Apple Inc. weighed on technology shares. Crude oil in New York fell 3.4 percent yesterday, poised for its biggest two-year drop on record. [Bloomberg]
FTSE Outlook and Prediction
Here we go then, the last trading day of the year and all eyes on where the FTSE will close today. It looks a bit weak again and shorting 6300 worked well yesterday. Support is looking decent at 6246 today as we have a Bianca channel and the 200ema on the 30min chart at this level. There is also the bottom of a descending 10min channel here. If this holds then a test of the daily pivot at 6272, and then 6312 above that look likely, though the bulls might have a bit of a struggle at 6312 to push higher today. That said, “they” might want a year end close above 6300 so you never know. I’m thinking that those 2 levels are worth trading off and see what happens. If the 6246 break though its probably worth flipping to short as there could be a dip to 6190 on the cards. Wills we close the year above 6200 or 6300?!