Good morning. Well that long off Friday’s pivot took a while to get going but get going it certainly did. Friday 20th March will now be in history as the day we broke 7000. I wonder if it will take as long to reach 8000 as it did to get from 6000 to 7000. Not as long I don’t think as I still think we will see 7500 this year – especially if the Tories win the election, and not have to form a coalition. Anyway, there wasn’t that much bearishness at 7000, which was a little surprising, but meant that we have then popped up to 7060 overnight. Could be an interesting week! Having popped above 7000 and ticked that record off, I am expecting a dip back towards the 25ema on the daily around 6890.
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks extended a six-month high after global equities capped their biggest weekly advance since July 2013. The dollar declined with crude.
The MSCI Asia Pacific Index rose a fifth straight day, adding 0.8 percent by 2:02 p.m. in Tokyo as China’s Shanghai Composite Index headed for its longest streak of gains since 2007. Standard & Poor’s 500 Index futures climbed 0.2 percent. The Bloomberg Dollar Spot Index extended a two-week low, with the greenback losing 1 percent against New Zealand’s currency. U.S. oil fell 1.1 percent as Saudi Arabia said it was pumping near record amounts of crude.
The value of global equities rose to a record $68.4 trillion on March 20 as investors bet shares will benefit from delayed Federal Reserve interest-rate increases and record central-bank stimulus in Europe and Japan. Three Fed members speak Monday after policy makers lowered their rate outlook, sending the dollar to its worst week since 2011. Greek Prime Minister Alexis Tsipras is set to meet German Chancellor Angela Merkel on Monday as he seeks to salvage a bailout deal.
“The overriding factor for the Fed is whether they can afford to overstimulate the economy or raise rates too soon,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “They can’t be too aggressive in raising rates as the underlying U.S. economy isn’t as strong. Equities will continue to trend higher but as valuations become stretched, markets will be more vulnerable to a pullback.”
Stock Moves
The MSCI All-Country World Index capped a 3.2 percent gain last week, its steepest advance since July 2013. The measure is up 7 percent over the past year as policy makers from Europe to Japan expand stimulus programs to stave off deflation and preserve growth. Their actions have helped counter the impact of the Fed, which has wound down its own quantitative-easing program and indicated it’s headed for a rate increase.
Both the Nasdaq Composite Index and the Stoxx Europe 600 Index came within 0.5 percent of record highs last week. Fed officials said in their statement that they’ll be waiting for confidence in the recovery before boosting borrowing costs.
Hong Kong’s Hang Seng Index climbed 0.6 percent Monday and the Hang Seng China Enterprises Index was 0.4 percent higher. The Shanghai Composite Index advanced 1.8 percent from its highest close since 2008. The gauge is heading for a ninth straight gain even after China’s securities regulator urged investors to consider risks from the nation’s surging stock market.
Kospi, Nasdaq
Australia’s S&P/ASX 200 Index was the only major benchmark gauge in Asia to decline today. The NZX 50 Index in Wellington and the Kospi index in Seoul rose 0.1 percent.
The Nasdaq Composite advanced for a fifth straight day Friday, gaining 0.7 percent to 5,026.42. The rally put the technology-heavy index within seven points of wiping out all its losses since the Internet bubble and came in the same week as Apple Inc., the Nasdaq Composite’s biggest member, entered the the Dow Jones Industrial Average.
In currency markets, the kiwi strengthened to 76.4 U.S. cents, while the Australian dollar rose 0.6 percent to 78.21 U.S. cents. South Korea’s won climbed 0.7 percent against the greenback, while the Malaysian ringgit added 1.4 percent.
The Bloomberg dollar index slipped 0.1 percent after losing 1.3 percent Friday to cap a slump of 2.2 percent for the week, the biggest since October 2011. The gauge of the U.S. currency against 10 major peers was at a decade high as recently as March 13.
Singapore’s dollar rallied with its Asian peers, gaining 0.2 percent to S$1.3767 per dollar. The Southeast Asian state declared a week of national mourning after the death of Lee Kuan Yew, its first elected prime minister. Lee, who was 91, helped transform Singapore from a colonial trading center into one of the region’s most prosperous countries in his 31 years at the helm.
Treasury Yields
Yields on 10-year Treasury notes were little changed Monday after tumbling 18 basis points last week to 1.93 percent.
Fed Vice Chairman Stanley Fischer speaks at the Economic Club of New York on Monday, while San Francisco Fed President John Williams will deliver a speech via videoconference to the Australian Business Economists. Cleveland Fed President Loretta Mester speaks on a panel discussion titled in Paris with with Bank of France Governor Christian Noyer.
European leaders, including Merkel, French President Francois Hollande and European Central Bank President Mario Draghi pressed Tsipras to make good on a February accord and “present a full list of specific reforms” in the coming days before any further aid can be disbursed.
Crude Production
West Texas Intermediate crude dropped to $46.01 a barrel after its first weekly increase in five weeks. Oil has been on the brink of both bull and bear markets this year as a declining rig count in the U.S. is countered by data showing the nation’s stockpiles are at a record high. Brent was down 0.8 percent at $54.90 a barrel.
Saudi Arabia’s Oil Minister Ali al-Naimi said at the weekend that the world’s biggest crude-exporting nation is pumping about 10 million barrels of oil a day, close to a record amount produced in 2013. Mohammed al-Madi, the Saudi governor to OPEC, said oil prices won’t return to $100 a barrel because higher prices would draw more shale and output from higher-cost producers to the market. [Ref]
FTSE Outlook
Todays pivot is 7002, and (ignoring the overnight spike up to 7060) first resistance is 7047. That said, the 30min chart is still positive, with the 10ema above the 25ema. The 2 main levels I am looking at for trading off today are the pivot at 7002 and the resistance on the 30mi8n channel at 7100. We are within a pretty decent looking 30min channel at the moment, with a rising 10 day channel as well. That said, the 2 prior hurdles that the bulls will need to overcome are 7047 and 7066. The top of the 10 day Bianca is at 7114 and we have a daily RSI figure nudging 70 at the moment – which is why i think, even if we push higher today, a pull back to test the 25ema on the daily at 6890 is likely. We haven’t tested that since it crossed over to bull on 19th March. Support below this is 6836 where we have the bottom of the 10 day Bianca. I have plotted an arrow today for a rise to 7100, though it might well struggle at the 7065 area so note that.