Good morning, I hope you had a good weekend. The FTSE continues to be rather jumpy and will be all week int he run up to the Scottish vote not he 18th. Polls are neck and neck still, with the lead chopping and changing – a bit like sentiment for the FTSE and USD/GBP. Short, long, no short, no long etc! Sunday evenings open saw a dip down to 6755 but then a little climb back to just below Fridays support (6786) at 6783. Friday was a bit of a slow one – bulls never managed to break that 6818 despite a few goes, while the 6786 support was virtually tested after hours, but not by enough for the long to trigger (I had removed the order by then anyway), and did bounce back to 6800. I expect its going to be jumpy all week, as will Sweden after the krona weakened 0.4 percent to 9.2704 per euro today. The three-party Social Democratic opposition bloc won 43.6 percent of the vote in an election, versus 39.5 percent for the government’s coalition, with 97 percent of ballots counted. The Social Democrats must now garner support from other parties to form a majority.
Asia Overnight from Bloomberg
Asian stocks fell with U.S. equity-index futures, Australia’s dollar weakened to a more-than five-month low and copper slid after Chinese factory and retail data added to evidence a slowdown is deepening. Brent crude oil dropped to a two-year low.
The MSCI Asia Pacific excluding Japan Index lost 1 percent by 1:11 p.m. in Hong Kong, where the Hang Seng ChinaEnterprises Index dropped 1.5 percent. Standard & Poor’s 500 Index futures fell 0.4 percent after the U.S. gauge dropped 0.6 percent Sept. 12. The Aussie retreated a sixth day while Indonesia’s rupiah weakened to a two-month low versus the dollar. Crude in London and New Yorksank at least 0.6 percent. Copper fell 0.9 percent. Sweden’s krona weakened as the country faced a hung parliament. Gold climbed from an eight-month low.
Royal Bank of Scotland Group Plc cut its 2014 estimate for Chinese economic expansion to 7.2 percent from 7.6 percent after August industrial output growth was the weakest since the global financial crisis. Factory data is due in the U.S., where the fastest increase in retail sales in four months bolstered speculation the Federal Reserve will signal a move toward interest-rate increases at a meeting this week. The Bank for International Settlements warned international borrowing and low volatility are increasing risk for emerging-market assets.
“The Chinese data was not ideal at all,” said Mao Sheng, an analyst at Huaxi Securities Co. in Chengdu. “If the Fed were to raise rates earlier than expected, that wouldn’t be good for Asia stocks as there will be an outflow of funds to the U.S.”
All 10 industry groups on the Asia Pacific excluding Japan stocks gauge fell today, led by energy and financial companies. Japanese markets are closed today for Respect for the Aged Day.
Hang Seng
The gauge of Chinese companies listed in Hong Kong, which fell the most since March last week, is heading for its lowest close in more than a month. The Hang Seng Index dropped 0.8 percent and the Shanghai Composite Index slipped 0.1 percent.
Factory production in China rose 6.9 percent in August from a year earlier, the statistics office reported Sept. 13, down from 9 percent in July and below the 8.8 percent growth predicted by economists. It was the slowest pace outside the Lunar New Year holiday period of January and February since December 2008. Growth in fixed-asset investment slowed to 16.5 percent, while retail sales expanded 11.9 percent, trailing the 12.1 percent rate estimate and easing from 12.2 percent in July.
Reports last week showed a second straight monthly decline in imports and a 40 percent drop in the broadest measure of new credit. Growth in gross domestic product may ease to between 6.5 percent and 7 percent in the third quarter should data for September also be weak, according to Australia & New Zealand Banking Group Ltd.
Fed Meeting
The Fed, which meets Sept. 16-17, is considering the timing of rate increases and whether to revamp its public guidance on the path of rates. The central bank has said since March thatinterest rates would stay low for a “considerable time” after it completes a monthly bond-buying program that’s on track to end this year.
Sales at U.S. retailers climbed 0.6 percent in August, the fastest pace in four months, while another report showed consumer confidence rose more than estimated.
FTSE Outlook
Its going to be pretty confusing this week, mainly on reactions to polls, sentiment etc. With the S&P well off from its 2012 now, i expect a bounce as that is just hitting its 20 day support, as are the FTSE and Dax with the 20 day Raff, along with the 10 day Bianca at 6772. Basically I think early this week will see some bull, then a lot of jitters come Thursday. friday depends entirely on the result – Yes vote bad, No vote good – but we shall see. Watching the S&P we should see a climb bcd to 1997/2000 then a dip again. For today, 6786 has been broken so the next support is 6772 (bottom of the 10 day Bianca) but with last night move to 55, I think we may dip down to 6760. As such a small long there to target 6800 could be a good play, as we also have the 20 day Raff at 6755. Its pretty confusing, but if that breaks then I expect a dip towards 6700.
On the flip side, if the bulls break the pivot then 6820 is next resistance with 6830 and 6864 above that.