Good morning. That was quite a sell off yesterday morning not helped by IG going offline for a short while. It was fuelled by a cash crisis in Greece with the situation that they have raided an emergency account of IMF money to pay…. the IMF their loan payment. See you next month for the next stage in the Greek saga. Having found a bottom around the 6885 area, we have climbed back, with the US fairly unfazed by Greece (and probably hoping that Germany sort them out!). In UK news yesterday manufacturing and industrial production data came in slightly better than expected – helping to arrest that initial fall. Fair bit of news out today with Eurozone data, and then US retail sales at 13:30. IG and other platforms also apply the dividend today (IG at 16:30) with it being 12.3 we might well get some divi hunters buying from about 16:20 this afternoon.
US & Asia Overnight from Bloomberg
Asian stocks fell for a second day after a retreat in global equities as concern mounts over the selloff in bonds. Consumer companies led losses.
The MSCI Asia Pacific Index slid 0.1 percent to 151.43 as of 9:01 a.m. in Tokyo. While a successful auction of three-year debt helped arrest the slump in U.S. Treasuries, bonds from Europe to Japan were sold off Tuesday amid a rout that has erased more than $450 billion in value from the global market. The Stoxx Europe 600 Index sank 1.3 percent, while the Standard & Poor’s 500 Index lost 0.3 percent.
“Rising bond yields are making equities less attractive,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages $124 billion, said by phone. “Markets don’t go up in a straight line and after a while they get vulnerable to a pullback and this is what’s happening here. This is a correction and not the start of a bear market. We’re still seeing fairly constrained global growth and central banks are still running very easy monetary policies.”
Japan’s Topix index lost 0.6 percent. South Korea’s Kospi index added 0.2 percent. Australia’s S&P/ASX 200 Index increased 0.1 percent. New Zealand’s NZX 50 Index gained 0.3 percent. Markets in China and Hong Kong have yet to open.
China’s Shanghai Composite Index climbed 1.6 percent on Tuesday, bringing its three-day advance to 7 percent, amid speculation lower borrowing costs will bolster domestic consumption.
The People’s Bank of China trimmed interest rates over the weekend after recent economic data including exports and inflation showed weakening demand. The government will release data on industrial output and retail sales on Wednesday, with credit data also due this week.
E-mini futures on the S&P 500 rose 0.1 percent today. The underlying measure pared a loss of as much as 0.9 percent on Tuesday as yields on the 10-year Treasury note retreated from the highest level since November to decline three basis points to 2.25 percent. An auction of three-year notes drew the strongest bidding since 2009. [Ref]
FTSE Outlook
Todays pivot is 6956, virtually were we are as I am writing this (slightly earlier today as am going to be away from the desk today). The bulls will be keen to break this level initially and the 30min EMAs suggest that they should be able too. However, after yesterdays dip the daily EMAs have crossed to bearish and as such we have resistance at 6995 for today, where we have the 25ema. I have plotted a fairly positive session to start with to that level, but if any Greek news breaks then it may well upset that. Asia has been fairly positive which has helped the FTSE retain its gains from yesterday afternoon. Support below 6945 is 6925 and 6914 where we have the bottom of that rising 30minute channel. A break of yesterdays low at 6885 will likely see a trip to the bottom of the Bianca channels that are clustered around the 6850/60 area. Resistance above 6995, is 7040 for the top of the 20 day Bianca and 7064 for the 10 day. 7044 area is also the top of that 30minute channel, so if the bulls manage to push above 6995 then that level could be worth a short.