Good morning. So thats a No then, 55% versus 45%, not a resounding victory but a victory for No nonetheless. As expected if No won, the FTSE and Sterling have climbed well, the FTSE now at 6900 as I write this and GBPUSD 16650. Will it go for the all time high today? Watching the S&P its at 2020 currently – still got resistance at 2030 on that. The news today is just going to be Scotland all day I expect, even Alibaba’s record IPO ($21.8bn) gets second billing! I wouldn’t be surprised to see an initial dip as all the longs profits get banked on the initial news. Its also quadruple witching this morning, so expect a bit of volatility at 10:10am.
Asia Overnight from Bloomberg
The pound headed for its biggest two-day jump in almost a year, U.K. share-index futures rose and Treasuries fell as Scotland voted to reject independence. The yen fell, while Japanese equities and U.S. stock-gauge futures climbed.
The pound gained 0.6 percent to $1.6491 by 1:29 p.m. in Tokyo, taking its two-day advance to 1.3 percent, and FTSE 100 Index futures added 1.1 percent. The yield on 10-year Treasuries climbed three basis points while S&P 500 futures advanced 0.5 percent following another record in New York. The Topix index increased 1.2 percent as the yen plunged through 109 per dollar to trade at the lowest since August 2008. Malaysian bonds rose after the central bank held rates. Wheat hit a four-year low.
With 26 of 32 districts reporting, the British Broadcasting Corp. projected victory for the anti-independence ‘No’ camp, with 55 percent of the vote. About $145 billion was added to the value of global equities yesterday as U.S. jobless data beat estimates a day after the Federal Reserve pledged to keep rates near zero for a considerable time after ending bond purchases.Alibaba Group Holding Ltd. (BABA) raised $21.8 billion selling shares in the biggest U.S. initial public offering.
“There will be a reversal of the flight to quality,” said Will Tseng, a bond-fund manager in Taipei at Mirae Asset Global Investments Co., which has $65.1 billion in assets. “People can take on riskier assets.” A “no” vote “will help political stability in Europe. The U.S. economy is doing well,” he said.
‘Small Shift’
Just four districts including Glasgow and North Lanarkshire, the biggest and the fourth-largest by voters respectively, reported the ‘Yes’ camp gaining more than 50 percent of votes. More than 80 percent of eligible voters took part in the poll.
The pound was stronger against all 16 major currencies, climbing 0.5 percent to 1.2757 euro, the highest since Aug. 16. The FTSE 100 snapped a three-day drop yesterday, adding 0.6 percent, while yields on 10-year gilts rose six basis points, or 0.06 percentage point, to 2.58 percent yesterday.
Benchmark U.S. 10-year yields rose three basis points to 2.65 percent, according to Bloomberg Bond Trader data. The U.S. five-year yield rose four basis points to 1.867 percent.
Investors who had purchased Treasuries as a hedge against financial market turbulence during the vote on independence are unwinding the trade, said Kazuaki Oh’e, a debt salesman at CIBC World Markets Japan Inc. in Tokyo.
Yen Retreat
The yen plunged 0.5 percent to 109.22 per dollar, the weakest since August 2008. Japan’s currency is the worst-performing of 16 major currencies versus the dollar this quarter, losing more than 7 percent since the start of July. New Zealand’s dollar experienced the the second-biggest decline.
Japan’s Topix is headed for a third straight weekly advance, rising 1.6 percent. Australia’s S&P/ASX 200 Index added 0.3 percent today, while South Korea’s Kospi index gained 0.5 percent.
Hong Kong’s Hang Seng Index increased 0.4 percent and the Hang Seng China Enterprises Index slipped 0.3 percent. The Shanghai Composite Index fell 0.1 percent.
Alibaba and shareholders including Yahoo! Inc. (YHOO) sold 320.1 million shares in the Hangzhou, China-based company for $68 each, after offering them at a range of between $66 and $68, according to a statement. The IPO — which values Alibaba at $167.6 billion — is already the largest by any company in the U.S. and has the potential to break the global record if additional shares are sold to underwriters.
Jobless Claims
U.S. jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, data yesterday showed, while another report indicated the housing market recovery remains uneven, with fresh home construction down 14.4 percent in August, the most since April 2013.
The Fed tapered stimulatory bond buying by $10 billion for a seventh time, staying on course to end the program as soon as next month. Officials said the economy is expanding at a moderate pace and inflation is below its goal.
FTSE Outlook
Friday, Scottish results and Quadruple witching today. Going to be fun!
With the overnight rise off the back of the No victory, most of the technical levels are quite far away now but by Monday things should be a bit more back to normal. Initially today I can see some profit taking for those that bet on the No, so a dip back from the round number 6900, probably to test the previous resistance around 6872 (now turned to support) and the various EMAs there as well on both 10 and 30 minute charts.
If that 6872 level holds then we could well get a second push to 6900, and probably 6937 which is a fairly significant resistance. With quadruple witching today the markets will get a bit jumpy 10:10 till 10:30 this morning so bear that in mind as various contracts expire and roll over. 6873 is also the top of the 20 day Bianca channel in case you were wondering why I have mentioned that level, so a back test of the channel breakout.
Generally today I think we will be bullish, at least initially. If the S&P rises through the 2020 there is resistance at 2030 so might well dip off a bit from there, which might tally with the FTSE making some new record highs. Good for the weekend headlines anyway – “Scottish No victory pushes FTSE to all time highs” “Economy soars on No vote win” etc etc!!