Good morning. Interesting day yesterday that was pretty choppy as expected. The Dax was very bullish off that 9550 support area, adding nearly 200, while the FTSE stalled at 6900. The S&P dipped back from the 2009 area yet again, and is again sub 2000. Feel like the FTSE is lagging again, though the bulls will need to break 6906 today to target new highs. We also have NFP news out int he US later – always a market moving event, and if it gets the S&P below 1995 then the highs might be in on that now at 2012. ECB news yesterday saw an interest rate cut and more stimulus, just as the US is winding theirs down.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index heading for a second daily decline, as material companies slid.
The MSCI Asia Pacific Index slipped 0.5 percent to 148.17 as of 10:57 a.m. in Hong Kong, with about four shares declining for every three that rose. The gauge headed for a 0.2 percent advance this week as reports showing faster growth in China’s service industries and U.S. manufacturing boosted optimism in the world’s biggest economies, and the European Central Bank unexpectedly cut interest rates.
“We’re seeing a bit of profit-taking today following the recent rally,” Ryan Huang, a market strategist at IG Ltd. in Singapore, said by phone. “Investors are looking out for the U.S. jobs data due tonight and the Chinese exports data next week.”
Hong Kong’s Hang Seng Index declined 0.4 percent. Australia’s S&P/ASX 200 Index, South Korea’s Kospi index, Taiwan’s Taiex index and Singapore’s Straits Times Index each dropped 0.5 percent.
China’s Shanghai Composite Index gained 0.3 percent. Japan’s Topix index was little changed after the yen weakened to an October 2008 low. New Zealand’s NZX 50 Index increased 0.4 percent.
The MSCI Asia Pacific Index (MXAP) traded at 13.8 times estimated earnings yesterday, compared with 16.7 for the Standard & Poor’s Index and 15.6 for Stoxx Europe 600 Index.
U.S. Futures
Futures on the S&P 500 slid 0.2 percent today. The U.S. equity benchmark slipped 0.2 percent yesterday as energy producers sank with oil prices to overshadow the ECB announcement.
U.S. data yesterday showed service providers such as retailers and construction firms expanded in August at the fastest pace in nine years, a sign of growing momentum in the broadest sector of the economy.
Applications for unemployment benefits were little changed last week, while a separate report indicated firms added fewer jobs in August than estimated. The Labor Department’s monthly jobs report is due today.
ECB Stimulus
The ECB unexpectedly cut interest rates and said it will start buying assets, boosting the flow of funding for the euro-area economy while stopping short of broad-based quantitative easing. The move buoyed European stocks and sent bond yields negative.
“The ECB move is positive for the market,” said Angus Gluskie, managing director at White Funds Management in Sydney, where he helps oversee about $550 million. “The broader global economic outlook is reasonably positive. In the short term, it’s worth being cautious given prevailing geopolitical risks.”
Ukraine’s President Petro Poroshenko voiced “careful optimism” that talks with pro-Russian rebels in Minsk, Belarus, will set the course for a cease-fire after more than five months of fighting. After Poroshenko met with leaders of the North Atlantic Treaty Organization, the alliance’s Secretary General Anders Fogh Rasmussen said it’s too early to tell whether peace overtures by Russian President Vladimir Putin are genuine.
FTSE Outlook
Today depends on 2 things – NFP news and the S&P holding above 1995. Below 1995 and i think it will continue down to 1985, which will drag the FTSE down bit too. Its actually been quite strong in light of the S&P falling off from 2012, so still looks like it might get that rise to 6950, and maybe 7000, 7100 soon! A dip first would be good though to set up a better spring board for a push higher. The daily pivot for today is now resistance at 6883, along with the 6890 level still in play. A break of that will target 6904 and then 6936. On the bearish side, support is at 6854 where we have the 200ema on the 30minute chart, followed by 6842 and 6832, the former is the bottom of the 10 day Bianca channel. We dropped off from the top of the 10 day Raff again yesterday after the second test of that channel in as many days, spa full channel crossing would see prices drop to 6830 in the next couple of sessions.
I have plotted a fairly optimistic start to test the 6890 level before dropping back – from that level I am a bit more bearish again as the S&P is leading the way, though the bears need to break 1995 as mentioned – we have a fairly decent 30min channel wight hat level in play, and the bottom of which is 6850, around that 200ema support level too. With the 20 day Bianca here, if this level holds then we should see the all time high next week, but as I said a lot depends on the US today.