Good morning. Wow, that was quite some drop yesterday that blew that 6509 long right out of the water, and kept going to get a low at the 10 day Raff at around 6435. Having reached that level we got a bit of a bounce in the early evening to 6480 were we look like opening at. The bulls will need prices above 6565 to confirm thats the bottom, they are going to have to fight hard for that. It dropped yesterday on the ECB press conference from Draghi and also deflation fears – which is what is effecting the supermarkets at the moment.
Today is Non Farm Payrolls (NFP) so at 13:30 that will create some movement. If ADP from the other day is any sort of indicator then NFP might be good. Which will probably make the US indices drop!
Asia Overnight from Bloomberg
Asian stocks dropped for a sixth day as the yen held two days of gains, curbing the earnings outlook for Japanese exporters. Trading is due to resume in Hong Kong following a two-day holiday.
The MSCI Asia Pacific Index (MXAP) declined 0.1 percent to 138.35 as of 9:00 a.m. in Tokyo, before markets open in Hong Kong. The gauge is down 2.6 percent this week, on course for the biggest weekly drop in six months. The measure has retreated 7.4 percent from a six-year high in July.
Pro-democracy leaders in Hong Kong said they will escalate protests if their demands aren’t addressed. European Central Bank’s President Mario Draghi said the central bank will buy assets for at least two years to boost inflation and economic growth in the euro area. U.S. jobless claims unexpectedly dropped last week, data showed yesterday. A report on American payrolls is due to be released today.
“Most world stock markets are currently in a correction,” said Monty Guild, chief investment officer of Los Angeles-based Guild Investment Management Inc., which runs global equity funds. “Many developed and emerging markets will be declining as investors withdraw funds to shift to U.S. dollar assets.”
Japan’s Topix index slipped 0.1 percent as the yen traded at 108.46 per dollar. Australia’s S&P/ASX 200 Index sank 0.2 percent and New Zealand’s NZX 50 Index fell 0.2 percent. Markets in South Korea, India and China are closed.
Hong Kong Chief Executive Leung Chun-ying, the city’s top official, refused calls from the protesters to resign, while offering student leaders discussions with his deputy Carrie Lam. The students, who are demanding China withdraw plans to vet candidates for 2017 elections, have said they will focus on political reform at the talks.
As investors assess the health of the U.S. economy, analysts are predicting a return to gains of more than 200,000 in nonfarm payrolls. The Federal Reserve, which is on track to announce the end of its bond-buying program this month, is assessing whether the recovery in the world’s largest economy is strong enough to withstand higher interest rates.
FTSE Outlook
After that fall yesterday I wouldn’t be surprised to see a bit of a rise to the 6521 area before another dip down. Initial resistance as I write this is 6488, so we may get a little dip from here to the 6475 area, where we have the bottom of the 20 day Bianca channel for today. That said, the bottom for he 10 day Raff for today is 6395 – and the touch of the bottom of that channel yesterday at 6435 held fairly well (slight overshoot but it rose back). 6525 on the FTSE might well tally with the S&P hitting 1955, which is looking like a fairly key area. Of course a lot will depend on NFP later on today which will determine the afternoon session, but it looks like a short at 6521 should be good, but long until that point. If the bulls break through that resistance then they will be targeting 6565 next and a break of that area will probably turn things around and that last night 6423 was the low for the moment.
So, bullish till 6521, then bearish for another leg down but with a stop at 6532.
Keep the stops tight and don’t forget its NFP today!