Good morning. Well the bounce from Fridays has managed to hold up around the 6600 level, shame it chose to bounce from the 6535 and not the 6523 level after all that, but hey ho. If this bounce os the real deal then the bulls need to break 6607 for growth to 6654 today. Weekend news was mainly about Iraq and the refugee situation there, especially now the US has conducted the first wave of airstrikes. The UK are only doing aid at the moment but could easily be pulled back into any conflict. Other news of note is that the recent measures on mortgage caps etc have brought house prices rises to a halt, notably in London. Still, they couldn’t keep on rising at that rate!
Asia Overnight from Bloomberg
Asian stocks rose, with the benchmark index rebounding from the steepest drop since May, as Japanese shares led gains and Chinese developers surged.
The MSCI Asia Pacific Index (MXAP) advanced 1.2 percent to 145.84 as of 12:25 p.m. in Tokyo, heading for its biggest rally since June 19. The measure sank 1.4 percent Aug. 8, its steepest drop since May 7, as U.S. President Barack Obama authorized air strikes against militants in Iraq.
“It’s a rebound from last week’s slump,” said Tatsushi Maeno, head of Japanese equities at PineBridge Investment Japan Co. in Tokyo, which oversees about $2.9 billion. “Stocks have been sold a lot because of geopolitical risks, but I don’t think this is the beginning of a bear market. Our main scenario remains the same: shares will rise toward the end of this year as the U.S. economyexpands.”
Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The measure rose 1.2 percent on Aug. 8, the biggest rally since March 4, after Russia said warplanes ended drills nearUkraine.
Regional Gauges
Japan’s Topix (TPX) jumped 1.8 percent today, rebounding from a 2.4 percent slump on Aug. 8 after a report the nation’s pension fund freed itself to buy more domestic equities. South Korea’s Kospi index climbed 0.8 percent. Australia’s S&P/ASX 200 Index added 0.6 percent, while New Zealand’s NZX 50 Index slid 0.3 percent. Markets in Thailand are closed through tomorrow for holidays.
The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong advanced 1.7 percent and the city’s benchmark Hang Seng Index added 1.2 percent after mainland inflation data signaled policy makers still have room for monetary easing amid a lack of pressure on prices.
China’s Shanghai Composite Index gained 1 percent. Taiwan’s Taiex Index added 0.9 percent. Singapore’s Straits Times Index rose 0.7 percent.
Ukraine’s military has demanded pro-Russia rebels in the former Soviet republic’s east surrender, dismissing the insurgents’ offer of a cease-fire as they push ahead with their campaign. A rebel leader broached the possibility of a truce during the weekend, saying in a statement that militants will continue to fight should Ukraine not end its offensive. Russian Foreign Minister Sergei Lavrovsaid a cease-fire is “urgently needed,” saying the region faced a humanitarian catastrophe.
Middle East
Israel and Gaza Strip militants began to observe another Egypt-brokered truce, giving negotiators time to craft a more enduring accord after a month of violence in the Hamas-ruled territory.
Chinese developers rose as first-tier city Shenzhen plans to make small adjustments to property policies and scrap limits on home prices, China Times reported, citing an unidentified person familiar with the matter. Sunac China jumped 6.7 percent to HK$6.56 and China Resources Land Ltd., the second-biggest mainland developer listed in Hong Kong, advanced 5.5 percent to HK$17.76.
China Inflation
China’s consumer price index rose 2.3 percent in July from a year earlier, the government said Aug. 9, the same pace as in June and also the median estimate in a Bloomberg News survey. Factory-gate prices fell 0.9 percent, matching projections and extending the longest stretch of declines since 1999.
China loosened monetary conditions last quarter at the fastest pace in almost two years, a Bloomberg LP gauge showed, testing the waning effectiveness of credit in supporting economic growth. Bloomberg’s new China Monetary Conditions Index — a weighted average of loan growth, real interest rates and China’s real effective exchange rate — rose 6.71 points to 82.81 in the second quarter from the previous three months.
FTSE Outlook
As mentioned above, if this bounce is to be real it needs to break 6007. As such we may see an initial dip from there down to the pivot which is 6565 today before more upside. If the bulls can break 6607 (and we also have the top of the 10 day Bianca channel at 6598 today) then we should be on for a decent rise to at least 6640, possibly 6654 on the breakout of that daily channel. The 10 day Raff channel top is 6640, which is where that figure comes from. I feel that if we break 6607 then the lows are in for the moment. So, looking to stay bullish for the moment as I think that the bulls will have a go for the short term. If we break 6607 properly then hop on the move to target 6650, otherwise go long on a dip to the pivot is my plan today. We have the 200ema on the 30min at 6615 and a minor PRT line at 6616 so there is a couple of resistance’s around this area – so I have gone for an initial short from here to target the pivot.