Good morning. The news is obviously about the latest terror attacks in Paris that started on Friday evening, further weighing on markets which brought the FTSE down to 6080 (out of hours Friday). Paris is currently in lock down, with 120 dead at the time of writing this (Saturday morning as I am travelling early Monday morning). Overall it was another negative day with the FT100 extending losses to almost 3% in two days taking it to a six-week low of 6118 (in hours). Poor retail data in the US pushed more weight on the downward move. In terms of sectors house builders and supermarkets were the biggest losers and surprisingly commodities were near the top of the list of best performers.
News from Bloomberg
Europe Stocks Have Worst Week in Two Months on Growth Concerns
Worse-than-forecast data on euro-area growth, coupled with lingering concern about a Federal Reserve rate increase, dragged European stocks to a three-week low.
The Stoxx Europe 600 Index fell 0.8 percent at the close of trading in London, with three-fourths of its shares down, as data showed euro-area gross domestic product in the third quarter increased less than economists had forecast. The measure lost 2.7 percent this week, the most since the beginning of September.
“There are still ongoing concerns about slowing economic growth, and there are other worries about more QE in Europe versus a potential rate increase in U.S., which creates a dichotomy,” said Patrick Spencer, equities vice chairman at Robert W. Baird & Co. in London. “The higher dollar, higher rates and slower growth make investors worry, and the numbers in China haven’t been so great lately.”
The 12 percent rebound that took the Stoxx 600 to its highest level since August last week is being questioned amid weak economic figures, while the Fed prepares to raise interest rates. The equity gauge lost 1.6 percent on Thursday, the most in six weeks, on concern that higher borrowing costs in the U.S. may hamper the global recovery, just as commodities tumbled to their lowest levels since 1999.
All Stoxx 600 industry groups fell on Friday, with retail and household-goods companies sliding the most. Hermes International SCA and Burberry Group Plc dropped more than 3.4 percent. Eurofins Scientific SE slid 4.4 percent after HSBC Holdings Plc recommended selling the shares. Elekta AB dropped 3 percent after saying authorities are investigating its Italian unit for antitrust breach.
Syngenta AG was one of the few companies up, surging as much as 11 percent after people familiar with the discussions said China National Chemical Corp. is in talks to buy the Swiss pesticide maker.
Energy producers and miners led declines in the Stoxx 600 this week, sliding more than 5 percent. Telecommunication companies were the only ones that didn’t fall among 19 industry groups. They rose just 0.3 percent. [Bloomberg]
FTSE Outlook and Prediction
I am thinking that Asia might have a slightly negative start to the week, however at 6080/6100 level we are sitting on some fairly key support levels – 10 day Bianca at 6085, and the 20 day Raff at 6080, with a daily RSI(10) at 21. We have a declining 30min channel though with resistance at 6170, and support at 6050 for Monday. The daily pivot for Monday is 6109.
Slightly out there maybe but I am going to go for a rise from the 6060 area towards the pivot at 6110, and possibly further upside as the market shows the Paris terrorists that they won’t just tank after such atrocities. If that 6060 level holds then we might well start to turn a bit more positive overall, and see a rise away from the bottom of the current daily channels. There is a possible trend reversal area at the 6097 area to switch from bear to bull as well. A rise to near 6300 actually looks quite possible on the daily chart, as we have the 25ema there after a cross from bull to bear (the 10ema has moved below the 25ema). So, I’m going to set an order for 6060 and see what happens.