Good morning, I hope you had a nice weekend. Well the 2 longs on Friday took, one struck out (the long at 55), but the 6832 long took and had a decent run, well done if you held for most/all of it! Despite some positive Chinese news with August exports rising 9.4% v 9% expected, imports have dropped and that has seen equity markets dip since the open last night. With Friday putting in a V shaped recovery day, despite a woeful NFP result, “indications” are for more bull, and we are testing the bottom of the 10 day Bianca channel again as I write this at 6842, though may well test Fridays low today. In other news, looks like the UK will be brought into the ISIS conflict, the Ukraine ceasefire looks as fragile as very thin ice, and the big news for the next 2 weeks will be the Scottish independence vote.
Asia Overnight from Bloomberg
Asia’s benchmark stock index swung between gains and losses as investors weighed data showing Chinese exports rose more than analysts projected last month, while imports unexpectedly fell.
The MSCI Asia Pacific Index was little changed at 148.47 as of 12:06 p.m. in Hong Kong, amid holidays across the region, after rising and falling 0.1 percent. The gauge advanced 0.4 percent last week on data. The Standard & Poor’s 500 Index closed last week at an all-time high even after a report showed the slowest payrolls growth this year.
“U.S. data has been quite solid and if you get one aberrant number, I don’t think people will change their views,” Richard Jerram, chief economist at Bank of Singapore Ltd., said on Bloomberg TV. “The main focus this week will be Japan and China. There’s a lot of data coming out from there.”
Chinese exports rose 9.4 percent in August from a year earlier, while imports slid 2.4 percent, leaving a record trade surplus of $49.8 billion, according to a government report. That compared with median economist estimates for increases of 9 percent and 3 percent respectively.
“Investors are expecting China’s economy to improve in the second half, but they’re concerned the import numbers today show industrials may not be good enough to support that,” said William Fung, investment manager at Tanrich Securities Co. in Hong Kong.
Regional Gauges
Hong Kong’s Hang Seng Index slipped 0.3 percent. Singapore’s Straits Times Index lost 0.2 percent. Australia’s S&P/ASX 200 Index fell 0.5 percent. India’s S&P BSE Sensex index climbed 0.7 percent. New Zealand’s NZX 50 Index added 0.1 percent. Markets in China, South Korea and Taiwan are closed for a holiday.
Japan’s Topix index rose 0.4 percent. Gross domestic product contracted an annualized 7.1 percent in the three months through June, more than a preliminary reading of a 6.8 percent fall, the Cabinet Office said today in Tokyo. The median forecast of 25 economists surveyed by Bloomberg News was for a 7 percent drop.
Japan Stimulus
“The bounce Japan was looking for after the sale tax increase hasn’t really materialized,” Bank of Singapore’s Jerram said. “It seems the benefits from Bank of Japan policy, from the yen weakening, have largely faded away. It looks like the economy needs more support.”
The blow from Japan’s sales-tax hike extended into this quarter, with retail sales and household spending falling in July. The government signaled last week that it is prepared to boost stimulus to help weather a further increase in the levy scheduled for October 2015.
U.S. Jobs
Futures on the S&P 500 lost 0.1 percent today. The U.S. equity benchmark climbed 0.5 percent to a fresh record on Sept. 5 as geopolitical tensions eased and lower-than-estimated jobs data fueled bets the Federal Reserve won’t rush to raise interest rates.
American employers added 142,000 jobs in August, the fewest this year, representing a pause in the recent labor-market momentum as companies assess the prospects for demand. Weak growth in Europe prompted the region’s central bank to step up stimulus measures last week.
The cease-fire intended to stem months of bloodshed in eastern Ukraine is being tested as both the government and the pro-Russian separatists its army has been fighting report violations and casualties.
Presidents Petro Poroshenko and Vladimir Putin spoke Sept. 6 by phone on the progress of the truce, agreeing that the Organization for Security and Cooperation in Europe should monitor it, according to the Ukrainian leader’s website. The next talks on the conflict, which has cost more than 2,500 lives, may take place in a week.
FTSE Outlook
Based on Fridays recovery from the 6830 area, then there is still some bull power around, and the S&P is holding above the 2000 level again. Looking at the 30min FTSE chart, we are just below that rising channel, though wight he daily pivot at 6856, there is a pretty tight initial range, so may see a dip down to the Friday lows. We are also around the bottom of the 10 and 20 day Bianca channels, as well as the 10EMA on daily. All this adds up to the fact that there is fairly decent support around this 6840 area, though if it breaks then 6800 looks likely as the first stop. If it does hold then a push towards 6907 and 6918 look likely early this week.