Good morning. The FTSE failed to break the 6655 yesterday, and the long from 6637 didn’t manage to run any higher than that. At least the early morning short got a few points too! The FTSE was certainly jittery yesterday, despite the US being alright, despite consumer confidence declining – the S&P stayed above 1967 and the dow above 17000 (just!). All boils down to the uncertainty over interest rates and when they will rise. The RAF have started combat against ISIS, the Tory party conference have pledged more millions to the NHS, and the protests in HK continue, with no sign of abating, leading to the fourth straight day of losses. For the FTSE the daily channel bottoms are 6580 and 6540 now, with resistance at 6663, and the pivot at 6628. More bear?!
Asia Overnight from Bloomberg
Asian stocks fell, with the benchmark index heading for a fourth day of losses, after consumer confidence in the U.S. unexpectedly declined and Hong Kong braced for bigger protests as Chinese holidays started.
The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 140.20 as of 9:02 a.m. in Japan after retreating to a four-month low yesterday. The measure capped its biggest monthly decline in more than two years in September amid concern Chinese economic growth is slowing and that the Federal Reserve may increase U.S. borrowing costs sooner as it ends asset purchases.
“There are a lot of worries about when the U.S. will start raising rates,” Nader Naeimi, who helps manage about $125 billion as head of dynamic asset allocation at Sydney-based AMP Capital Investors Ltd., said by phone. “There’s growing concern about the Hong Kong situation. If the protests continue, there’s a risk some businesses may pull out.”
Hong Kong’s Chief Executive Leung Chun-ying faces a deadline to respond to demands for his resignation and for free elections in the city as pro-democracy protests entered a sixth day. As dawn approached, tens of thousands of protesters packed key areas, undeterred by heavy rainstorms overnight. Hundreds of demonstrators had moved to a site in the Wan Chai district where Leung is attending a ceremony at 8 a.m. to mark the 65th anniversary of the founding of the People’s Republic of China.
Japan’s Topix index slipped 0.2 percent as investors weighed the quarterly Tankan survey of business sentiment. South Korea’s Kospi index sank 0.5 percent after a report showed exports rose less than expected last month. New Zealand’s NZX 50 Index fell 0.1 percent. Australia’s S&P/ASX 200 Index lost 0.3 percent. Hong Kong is closed today and tomorrow for holidays, while mainland China’s are shut through Oct. 7.
China Economy
China’s official manufacturing gauge for September is due today, with economists surveyed by Bloomberg expecting expansion to slow.
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent. The underlying equity measure lost 0.3 percent yesterday as small-cap and energy shares slumped amid the decline in consumer confidence.
Confidence among U.S. consumers fell to a four-month low in September as Americans’ views of the labor market deteriorated. The Conference Board’s index decreased to 86 last month, weaker than the most pessimistic forecast in a Bloomberg survey of economists, from an August reading of 93.4 that was the strongest since October 2007.
FTSE Outlook
Feel like it might be a bit bearish to start off with, even though its the first of the month. I did hear a statistic yesterday that today is the 4th strongest day of the year for the FTSE though! There is still a lot of uncertainty around with regards to the economy and how its doing, when will interest rates rise, what about QE, how Europe’s negative interest rates are having an adverse effect.
For today we have initial resistance at 6617, with the pivot at 6628 above that. The mid point of the 20 day Raff is 6635, whilst 6655 is yesterdays high. It all looks pretty weak though and I expect if the bulls fail to break 6617 then we will dip to yesterdays low at 6588. Below that we have 6559 offering decent support and a likely bounce point. The analysis has been slightly tricky today so its a tough one to call, but i think this morning will be bearish.