Good morning. The FTSE was buoyed by indications from the U.S. Federal Reserve late on Wednesday that the U.S. economy was strong enough to cope with an interest rate hike, which many expect it to decide on in December. Also expectations of more monetary support from the European Central Bank (ECB) next month helped push the markets upwards. The commodity sector was a strong early gainer but fell back in the afternoon on demand issues. House builders, banks and supermarkets were the weakest performers perhaps on the effects of the coming upward interest rate cycle.
US & Asia Overnight from Bloomberg
Asian stocks pared their biggest weekly advance in six weeks, with Japanese shares dragged lower by a stronger yen.
The MSCI Asia Pacific Index declined 0.2 percent to 133.71 as of 9:01 a.m. in Tokyo, paring this week’s climb to 1.2 percent. The gauge posted the biggest daily jump in a month on Thursday amid optimism the Federal Reserve’s pace of tightening will be gradual, taking its rebound to 11 percent from a September low.
“The Fed has made it clear that its base case is for a lift off in December and if they were to break that, it would be a huge, market-moving event,” said Evan Lucas, Melbourne-based strategist at IG Ltd. “It’s been very positive for markets this week, with equities responding favorably to this macro picture.”
Japan’s Topix index slipped 0.4 percent, paring a fifth week of gains, as the yen held Thursday’s 0.6 percent advance. Governor Haruhiko Kuroda, who unleashed unprecedented monetary stimulus at the Bank of Japan in 2013 and doubled down on it last year, is done expanding his efforts, according to an increasing number of economists. He is due to speak on Friday.
Australia’s S&P/ASX 200 Index gained 0.1 percent and New Zealand’s S&P/NZX 50 Index advanced 0.6 percent. South Korea’s Kospi index added 0.1 percent. Futures on Hong Kong’s Hang Seng Index rose 0.1 percent and those on the Hang Seng China Enterprises Index added 0.2 percent.
E-mini futures on the Standard & Poor’s 500 Index fell 0.1 percent. The underlying gauge is up 2.9 percent this week. The measure slipped 0.1 percent Thursday, after fluctuating throughout the day, as UnitedHealth Group Inc.’s profit warning rattled the health-care sector and oil’s descent sank energy producers. [Bloomberg]
FTSE Outlook and Prediction
Bit more bullish than I expected yesterday with an eventual rise to the top of the Raff channels at the 6370 area, as minutes from the Federal Reserve’s last meeting reassured investors the world’s biggest economy can withstand higher borrowing costs.. However, from there the bears reappeared with a dip back down. Looking at the 30minute chart there is more resistance than support on the face of it so I am favouring a slight dip today. We have resistance at the 6345/50 area so I think that any early bullishness might get tempered here, and we see a dip down to 6320 or lower.