Good morning. Well the first part of yesterday played out with the rise to 6840 then the drop down, not quite reaching 6812, but spent the rest for he day unable to break through that 6840 level despite a few attempts. Equally, 6812 still held, and was tested again later in the day. That level has held overnight too, so is still valid support for today, though a break of that will see 6801 where we have the 25ema on daily.
News yesterday was still filled with the Scottish vote expectations, as indeed it probably will be for the next 2 weeks. Certainly going to be interesting to see which way the vote goes, the press is stoking up the panic stations in case of the Yes vote winning with headlines of impending financial calamities! On a lighter note, but still significant was of course the release from Apple, whose shares rallied 4.5%, then faded down 3.5%, reflecting that early evening move in the US indices.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional index dropping the most in a month on concern that China’s growth is slowing and amid speculation that U.S.interest rates will rise sooner than estimated. The dollar reached a fresh six-year high to the yen and crude oil rose.
The MSCI Asia Pacific Index dropped a fifth day, slipping 0.6 percent by 2:12 p.m. in Tokyo. Hong Kong’s Hang Seng Index retreated 1.7 percent as Chinese Premier Li Keqiang announced money-supply growth that was the slowest in five months. Standard & Poor’s 500 Index futures declined 0.1 percent after the U.S. gauge’s biggest retreat since Aug. 5. The greenback bought as much as 106.52 yen, while the Australian currency slid 0.4 percent. Oil in New York and London advanced and copper climbed 0.3 percent.
The U.S. reports on wholesale inventories today, as investors including BlackRock Inc. speculate that an improving labor market and signs of inflation may justify sooner-than-forecast rate increases by the Federal Reserve. Premier Li’s announcement came before China releases data on lending and money supply this week, with economists estimating aggregate financing will cap its biggest two-month slump since 2011. France and Spain report on industrial production today.
“Investors are shifting their focus towards the end of quantitative easing and the commencement of interest rate hikes by the Fed,” Keith Poore, who helps manage $131 billion as Wellington-based head of investment strategy at AMP Capital Investors Ltd., said by phone. “If they tighten prematurely, the global economy could slide back into recession, but I don’t think they would.”
Group Movers
Nine of 10 industry groups on the Asia-Pacific gauge retreated today, led by energy firms, materials producers and information technology companies.
The Hang Seng Index is down for a fourth straight day, the longest such streak since the period ended June 19. A gauge of Chinese companies listed in the city retreated 2.1 percent, the most since April 11, as banks and energy companies declined.
China’s M2 money supply, the government’s broadest measure, rose 12.8 percent in August from a year earlier, Premier Li said yesterday in Tianjin, the state-run Xinhua News Agency reported ahead of the official release by the People’s Bank of China. That compares with a 13.5 percent pace in July, which was also the median estimate for August in a Bloomberg News survey of analysts.
Australia’s S&P/ASX 200 slid 0.6 percent, headed for its lowest close since Aug. 14. Prices for iron ore, Australia’s biggest export, fell 0.5 percent at China’s Tianjin port yesterday, declining a sixth trading day and reaching their lowest level since Sept. 23, 2009, according to data compiled by The Steel Index Ltd.
Rate Bets
BlackRock’s Chief Investment Officer Rick Rieder said interest rates are likely to drift higher as research from the Federal Reserve Bank of San Francisco Sept. 8 indicated investors may be underestimating how quickly U.S. policy makers may tighten policy. Rieder said last month in a Twitter post that the Fed may increase rates early in 2015.
There’s a 61 percent chance the Fed will raise its benchmark interest-rate target to at least 0.5 percent by July 2015, futures trading shows. The likelihood was 52 percent at the end of August. The U.S. central bank is gauging the strength of the world’s largest economy as it winds down its bond buying program and considers the timing of raising rates. Fed officials next meet Sept. 16-17.
Apple Inc. (AAPL) dropped to $97.99 in New York, after advancing during the trading session to within a point of an intraday record. The stock, which is still up 22 percent this year, has typically fallen on other days when Apple introduced new products. Shares dropped 2.3 percent Sept. 10, 2013, the day the iPhone 5s and 5c debuted.
FTSE Outlook
I think that the 6812 level will still hold initially, and we gets rise to todays pivot at 6829. We also have the top of that rising channel at 6830 so I expect a bit of a stall there. I assume a dip back then another rise, and a lot will hinge on whether the bulls can break 6847 to push slightly higher, possibly reaching a similar resistance level I had for yesterday at 6874 where there is a major PRT resistance line, as well as the mid point of both the Raffs. To start the day the moving averages are all bearish so the bulls will have to charge out the blocks to make sure that 6812 holds. If that breaks then we will dip to 6800, and 6784, and then the next support after that is Monday’s low at 6772. Below that and it starts looking quite bearish for 6710, though as mentioned yesterday I do think they will want the FTSE higher so any drop on the vote results is less pronounced.
Looking at the chart right now it actually looks a bit directionless!