Good morning. The big news out today will be the UK GDP at 09:30 and expected to be 2.7% so keep that in mind. at 12:30 we have the US personal income and spending results so a little bit of chop then as well. I mentioned yesterday that I expected the day to be flat to slightly bullish with support at 6555, the low was 6560 and we have seen a slow gain since, hitting an overnight high of 6606. I still think we will rise a bit further and am looking at 6610 and 6650. Overall it was a fairly quiet day yesterday, with a fairly tight range on the FTSE, certainly during trading hours anyway, despite a drop in US jobless claims.
Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark gauge heading for its biggest weekly increase in almost a year. Yahoo Japan Corp. plunged after agreeing to buy assets from its parent.
The MSCI Asia Pacific Index advanced 0.4 percent to 136.63 as of 1:06 p.m. in Tokyo, reversing earlier losses. The measure has gained 2.9 percent since March 21. Chinese shares in Hong Kong are poised for a 6.4 percent surge this week, the most since November, while Japan’s Topix (TPX) index is set for its first weekly advance in three.
Today’s rally pared the MSCI Asia gauge’s loss this year to 3.3 percent. Chinese Premier Li Keqiang said the country has policies in reserve to deal with any economic volatility this year and can’t ignore “difficulties and risks” from a slowdown, according to a central-government website statement.
“The market’s focus is switching to the next catalysts, such as expectations for government action,” said Masaaki Yamaguchi, equity market strategist at Nomura Holdings Inc., Japan’s biggest brokerage by market value. “In China, the economic outlook is worsening for sure, but I think hopes for government measures are providing a floor to the market.”
Weaker economic data from China is fueling optimism the government will act to stabilize growth. Reports this week showed a drop in profit growth for industrial companies, while a private gauge of manufacturing in the world’s second-largest economy signaled a third month of contraction for the sector, with the index declining more than economists had estimated.
Monthly Loss
The Asian regional stock gauge is poised for a 0.8 percent decline this month as investors weighed the development of the Ukraine crisis, the health of the U.S. economy with the Federal Reserve paring stimulus and the outlook for China.
“Investors are a bit unsure given these issues regarding Ukraine, China, how strong the U.S. economy is when the Fed is tightening and what will happen in Japan after the sale-tax increase,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has $140 billion under management. “All of them are causing investors to hold back a little bit and we are seeing messy action in share markets.”
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The measure lost 0.2 percent yesterday, led by banks and technology companies, as investors resumed a rotation out of the bull market’s biggest winners.
Yesterday’s drop left the S&P 500 unchanged for the year. Losses this month have been steepest in U.S. stocks that led the five-year-old bull market, with consumer discretionary companies falling 4.3 percent after quadrupling since March 2009.
Jobless Claims
Applications for U.S. unemployment benefits unexpectedly declined last week to an almost four-month low, a sign companies are confident in the outlook for demand, data yesterday showed. Gross domestic product grew at a 2.6 percent annualized rate from October through December, less than the 2.7 percent median forecast of 79 economists surveyed by Bloomberg.
FTSE Outlook
Todays pivot is 6585 so I expect any dip to find support there initially, before a rise to the 6610 area pre GDP figures. Depending on them i think we will either climb to 6650, or drop to 6550. it wouldn’t surprise me if we are at 6610 at 09:29 today. Still, its Friday so bound to do something weird!
We have the top of the 20 day Raff at 6620 as well so the bulls will be hard pressed to break that area again, though they did do a good job of breaking out earlier this week. If they do manage to break out for a second time then it might stick this time and the 10 day Raff channel will be back in play, with resistance at 6680.
Basically pre GDP news I’m thinking a dip and rise, and then 60/40 favouring a dip after the news. I have put a pink arrow on the chart below as a plan B showing the rise to 6635/6650 as the reverse (well aware I’m hedging my bets here but the blue arrow is the preferred path).