Good morning. Well the short at 6670 didn’t really work yesterday but then flipping to the long for a run up to 6700 did. The lower level support at 6642 held much better than I was expecting, though we are now testing the top of the 2 Bianca channels at 6702 and 6707 this morning. Gold looks like it might start a new up leg which would tally with a decline in equities. UK GDP figures are out later, at half 9, forecasted to be 3.1% YoY and 0.8% QoQ. We also have Options expiry so expect a bit of choppiness around 10:10am.
Asia Overnight from Bloomberg
Asian stocks fluctuated, with the regional benchmark index headed for its best weekly rally since March, as investors weighed earnings, Ukraine developments and weak economic data that fueled bets central banks will maintain stimulus.
The MSCI Asia Pacific Index (MXAP) added less than 0.1 percent to 147.91 as of 11:47 a.m.,in Hong Kong, swinging for a loss of 0.1 percent. The gauge is headed for a 2.6 percent rally this week, the most since the period ended March 28. President Vladimir Putin said Russia will do everything it can to stop the conflict in eastern Ukraine.
“History tells us not to take these things at face value regarding what Russia is up to and I think we can error on the side of cynicism,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “We’ve seen a myriad of weaker-than-expected economic data from Japan to Europe and even to the U.S. That’s buoyed investor sentiment with regards to maintaining monetary stimulus longer.”
Regional Indexes
Japan’s Topix (TPX) index fell 0.1 percent. Australia’s S&P/ASX 200 Index added 0.4 percent and New Zealand’s NZX 50 Index rose 0.3 percent. Taiwan’s Taiex index lost 0.2 percent and Singapore’s Straits Times Index advanced 0.4 percent. Markets in South Korea and India are closed.
The Shanghai Composite Index rose 0.8 percent, while Hong Kong’s benchmark Hang Seng Index gained 0.7 percent. The Hang Seng China Enterprises Index of mainland stocks traded in the city rose 0.5.
Russia proposed a cease-fire for humanitarian aid deliveries to war-torn parts of southeastern Ukraine as a convoy of aid trucks from Moscow waited near the border with rebel-held areas. Even as Russia struck a conciliatory note, journalists at news outlets including Novoye Vremya and Hromadske TV reported seeing armored personnel vehicles crossing into Ukraine.
The euro area’s recovery unexpectedly stalled in the second quarter as its three biggest economies failed to grow, underlining the vulnerability of the region to weak inflation and the deepening crisis in Ukraine.
The monetary union’s gross domestic product in the three months through June was unchanged from the first quarter, when it increased 0.2 percent, Eurostat, the European Union’s statistics office in Luxembourg, said yesterday.
Weak Data
This week, data showed Japan’s economy contracted the most since 2011, China credit growth and industrial production missed estimates, and U.S. retail sales stalled.
Futures on the Standard & Poor’s 500 Index were little changed today. The measure gained 0.4 percent yesterday after a report showed applications for unemployment benefits rose more than forecast last week. Jobless claims climbed to the highest in six weeks, according to the Labor Department.
FTSE Outlook
Todays pivot point is 6674, and we have a rising PRT channel line offering support at 6679. As such, after an initial dip from the daily channels we might find support around this area for a bounce to the other major resistance at 6724. Below the pivot the next support is 6651, a break of which would lead to 6621. Gold looks to be starting a leg up which may coincide with a turn down in equites after this recent bounce, especially as we are testing the 20 day raff channel tops on Dax, S&P and FTSE. Shorting the rallies feels a bit safer at this exact moment, though the bears seemed pretty weak yesterday.