Good morning. A fairly decent day with the initial dip of the 6485 level, along with that gold trade too from 1220 to 1207. As you know the Fed minutes were released last night and put a rocket under everything, on the assumption that interest rates would remain low longer on continued economic weakness. The FTSE has nearly reached the top of the 20 day Bianca channel at 6560 over night, and there is initial resistance there, though today could well see a follow up move to push a bit higher.
Asia Overnight from Bloomberg
Asian stocks rose for a third day this week as Federal Reserve concerns over a global economic slowdown spurred bets that U.S. interest rates will remain low.
The MSCI Asia Pacific Index (MXAP) gained 0.5 percent to 138.81 as of 9:02 a.m. in Tokyo, before markets open in Hong Kong and China. Futures on the Standard & Poor’s 500 Index slid 0.1 percent after the underlying gauge yesterday surged the most this year. Slowing global growth and a stronger dollar pose potential risks to the U.S. outlook, Fed policy makers said at their September meeting, according to the minutes released yesterday.
“Minutes of the September Fed meeting acted like a steroid,” said Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion. They “seemed to suggest that U.S. rates could remain highly accommodative for longer than initially expected if global demand remained weaker than expected.”
Japan’s Topix index added 0.4 percent. New Zealand’s NZX 50 Index gained 0.1 percent. Markets in South Korea are closed for a holiday.
Australia’s S&P/ASX 200 Index rose 1.2 percent. Employers probably added 15,500 workers in September, after an increase of 32,100 in August, according to economists surveyed by Bloomberg before jobs data due today. The August employment report was revised yesterday, with the government statistician dropping the seasonally adjusted figure — which showed a record gain in the month — in favor of the raw data.
Fed Officials Saw Global Slowdown Among Risks to Outlook
Federal Reserve policy makers last month worried that slowing global growth and a stronger dollar posed risks to the U.S. economy as they decided to maintain a pledge to keep interest rates low for a “considerable time.”
A number of officials said the U.S. expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to minutes of the Sept. 16-17 Federal Open Market Committee meeting released today in Washington.
The minutes highlight growing concern among policy makers who say further gains in the dollar could hurt exports and damp inflation, which has undershot the Fed’s goal for more than two years.
FTSE Outlook
We are virtually testing the top of the 20 day Bianca channel at 6560 though I expect this to break and 6568/72 is a small resistance after that. The top of the Raffs could well be in play today at 6590 and 6606. The 25ema on the daily chart is 6639 – if it were to get that high then a short here might well be worthwhile for any further dip in this downtrend. A move above 6560 does invalidate the drop potentials for the moment, certainly for a major drop anyway. As I mentioned yesterday I still think October will end fairly positively and higher that we have seen this week! Todays pivot is at a fairly useless 6479 – I doubt it will dip that low today, but stranger things have happened. You often hear about gap closes – with the FTSE looking at opening around 6555 then it might well dip initially towards yesterdays close level at 6482 (coinciding with a dip to the pivot), however I don’t think it will drop that far this morning!