Good morning. I hope you had a good weekend. Fairly quiet on the news front over the weekend really, everyone waiting with baited breath to see if the Fed raise rates in September! However, German Chancellor Angela Merkel tried to reassure sceptical lawmakers on Sunday that the IMF would take part in a new bailout for Greece, before a parliamentary vote in which many of her conservatives may break ranks and reject the rescue. And Japanese GDP wasn’t as bad as feared. I’m expecting a bit of a rise towards 6650 early this week, where we have the top of the 10 day Raff and the 25ema on the daily. The FTSE has actually held up pretty well last week despite all the bearish moves, as has the S&P, bouncing back from that 2050 low. could actually be quite an interesting week ahead!
US & Asia Overnight from Bloomberg
Asian stocks rose, tracking an advance in U.S. equities, as Japanese shares gained after data showed the economy contracted less than expected.
The MSCI Asia-Pacific Index climbed 0.1 percent to 138.43 as of 9:01 a.m. in Tokyo after the measure sank 2 percent last week for a fourth weekly decline. The Topix index rose 0.3 percent as gross domestic product fell 1.6 percent on an annualized basis in the April-June quarter. Economists had been expecting a 1.8 percent drop. The People’s Bank of China raised the yuan’s reference rate Friday for the first time since devaluing it earlier in the week, arresting losses in the onshore-traded currency and fueling gains in the Hong Kong-traded yuan. The Standard & Poor’s 500 Index gained 0.4 percent.
“The situation surrounding the yuan has passed its peak and there’s a sense of calm,” said Hirotsugu Nagata, a member of the investment information department at Mizuho Securities Co. “The market’s attention now returns to the U.S. rate increase.”
China’s central bank soothed concern over the engineered depreciation Thursday, saying there’s no basis for persistent weakness in the yuan and that it will step in to curb large fluctuations. Asian currencies still capped their steepest weekly slide since 2011.
Korea’s Kospi index rose 0.2 percent on Monday. Australia’s S&P/ASX 200 Index gained 0.1 percent. New Zealand’s NZX 50 Index was up 0.3 percent. Markets in China and Hong Kong have yet to open.
Futures on Hong Kong’s Hang Seng Index added 0.1 percent in most recent trading. Contracts on the FTSE China A50 Index of the mainland’s largest companies slipped 0.2 percent after the Shanghai Composite Index rose 5.9 percent last week.
Futures on the S&P 500 rose less than 0.1 percent. The underlying measure capped a 0.7 percent weekly gain on Friday, recovering after China’s devaluation sent the measure lower. [Ref]
FTSE Outlook
Feeling a bit positive for today, and looking at the 10min chart there is a nice rising channel, the bottom of which we are currently tracking up. Resistance is around the 6628 area where we have the weekly pivot, then 6654 above that where there are some resistance levels on the daily. Generally looking at buying the dips today for a bit of bullishness. If the bears break 6673 though then a revisit to Fridays lows at 6643 looks possible. That area might well hold as support though, as we have a decent rising support going that low with Wednesdays low (higher lows if it does which is good for the bulls). If the bulls were to push on and manage to break the 6655 area then the top of the 10 day Bianca is 6668, then the 20 day at 6789.