Good morning. Nice move yesterday with the FTSE pretty much following the plan to the letter with the dip and rise, stopping just short of the 6740 ultimate target, not a bad run from 6787 though! The US increased the sanctions against Russia last night, while Twittter jumped 30% on their results. The big thing today will be the Fed update later and possible further QE tapering.
Asia Overnight from Bloomberg
Asian stocks rose for a fourth day, with the regional benchmark index extending a six-year high, before the Federal Reserveupdates markets on monetary policy today and as the U.S. and European Union strengthened sanctions against Russia.
The MSCI Asia Pacific Index (MXAP) added 0.4 percent to 150.01 as of 11:41 a.m. in Hong Kong, with eight of its 10 industry groups rising. The gauge climbed 2.6 percent this month through yesterday, when it closed at the highest level since June 2008, as a gauge of Chinese manufacturing added to signs Asia’s biggest economy is stabilizing and earnings at companies including Nissan Motor Co. and Fanuc Corp. beat estimates.
“The market rally looks sustainable,” Mark Matthews, Singapore-based head of Asia research for Bank Julius Baer & Co., which oversees about $377 billion, said by phone. “The major risk factors for the market are geopolitics and the direction of U.S. interest rates. The Fed will probably start raising rates in September 2015, but it’s going to be so small that it will have a very small impact.”
Russia Sanctions
The U.S. sanctioned three Russian banks and a state-owned shipbuilder that serves Russia’s navy and oil and gas industry, joining with the European Union in escalating penalties for action in Ukraine. The EU curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet over President Vladimir Putin’s backing of rebels in eastern Ukraine.
U.S. Futures
Futures on the S&P 500 added 0.1 percent today. The U.S. benchmark index yesterday slipped 0.5 percent as President Barack Obama announced new sanctions against Russia and warned its actions in Ukraine are “setting back decades of progress,” snuffing out gains led by telecommunication stocks.
Economic reports yesterday showed improving U.S. consumer sentiment while the housing market remains in a slowdown. The Conference Board’s consumer confidence index rose to 90.9, the highest reading since October 2007. Residential real-estate prices advanced 9.3 percent in the 12 months ended May, the slowest pace in more than a year, according to the S&P/Case-Shiller index of property values in 20 cities.
The Federal Reserve is expected to taper its bond-buying program for the sixth time at a two-day policy meeting that ends today. Investors will get a reading on second-quarter U.S. economic growth today, while the government’s labor report on Aug. 1 may show employers added 231,000 jobs this month.
FTSE Outlook
Todays pivot is 6808, which the bulls will need to break to reach 6823 initially. If they can hold above that then the immediate threat of a drop is reduced and it looks like it can push on to 6837/6843 area. The Bianca trends have upside targets of 6858 and 6875 though it might take a bit more than the bulls have today to reach them today. A lot will depend not he Fed later (7pm) and US news at 13:30 on GDP and jobs as to the direction for the rest of the week I feel. Below the pivot, we have support at 6766 being the bottom of the 10 day Bianca channel, with weaker support at 6787, yesterdays low, before that.
For today I am thinking an initial dip off the pivot area, then a drop down to 6766 area before a bit of a bounce, to 6800 and possibly 6823. If the 6766 support area were to break then 6730 is the support below that, a point at which it really should bounce.