A bit frustrating to be honest yesterday; a slow trending down day in the end with the bulls failing to break that 6876 resistance at the start, and the long order taking, rising, then getting stopped out. Since the various all time highs last week in the US its looked a little jittery, and we have earnings season starting once again with Alcoa later. Todays FTSE dividend is 1.1
Asia Overnight from Bloomberg
Gold fell as investors weighed the outlook for U.S. interest-rate policy, while nickel extended declines to a third day and corn futures rose from the lowest since 2010.Asia’s benchmark stock index was little changed near a six-year high and Malaysia’s ringgit strengthend.
Gold fell 0.2 percent by 1:36 p.m. in Tokyo. Nickel slipped 0.4 percent as some investors deemed supply sufficient for short-term needs. Corn rose 0.2 percent. The MSCI Asia Pacific Index lost less than 0.1 percent while Standard & Poor’s 500 Index futures fell 0.1 percent. Jakarta’s main stock gauge rallied before a presidential elections tomorrow. The ringgit climbed 0.3 percent amid speculation the central bank will raise rates this week.
The U.S. will sell $27 billion of three-year Treasuries today as investors seek clues as to the timing of interest-rate increases in the world’s largest economy. Data on American consumer credit is due today, along with reports on German trade and U.K. industrial output, while the Federal Reserve will publish minutes of its June meeting tomorrow. Japan posted a larger-than-estimated current-account surplus for May today, with China to issue inflation reports tomorrow.
“Markets are worried because the thing that keeps them going up is Fed policy,” Komal Sri-Kumar, the Santa Monica, California-based founder and president of Sri-Kumar Global Strategies Inc. said in a Bloomberg TV interview. “If they think the rate increase is going to come faster than they previously thought, stock markets react adversely to it. You don’t have any fundamental strength overall in the U.S. economy. The stock market is going to correct sometime in the next few months.”
U.S. Earnings
Three rounds of monetary stimulus from the Fed and better than-forecast corporate earnings have driven the S&P 500 up more than 190 percent from a low reached in March 2009. The S&P 500 is trading at 16.7 times the projected earnings of its members, above the five-year average valuation of 14.3.
Alcoa Inc. (AA) unofficially opens the second-quarter U.S. earnings-reporting season today. Profit at companies in the S&P 500 increased 5 percent in the three months through June, estimates compiled by Bloomberg show.
Gold bullion for immediate delivery fell to $1,317.08 an ounce, according to Bloomberg generic pricing. The metal, which rose to $1,332.33 on July 1, the highest price since March 24, dropped as much as 0.7 percent to $1,311.64 yesterday.
Money managers increased net-long positions for a fourth straight week through July 1 and holdings in exchange-traded products are climbing at the fastest pace since 2012.
China Data
Japan’s Topix gauge fell a second day, Australia’s S&P/ASX 200 Index dropped 0.1 percent and the NZX 50 Index in Wellington lost 0.4 percent.
The Hang Seng Index (HSI) in Hong Kong dropped 0.1 percent and the Hang Seng China Enterprises Index of mainland Chinese equities listed in the city was little changed. The Shanghai Composite Index slipped 0.2 percent.
Consumer-price growth in the world’s second-largest economy probably slowed to 2.4 percent in June from 2.5 percent in May, according to the median estimate of economists surveyed by Bloomberg before tomorrow’s data. A report July 10 is projected to show export growth accelerated last month and imports expanded after contracting in May, with data on Chinese economic growth due July 16.
Trade Talks
Talks this week between the U.S. and China will include “frank” discussion over theyuan exchange rate and the opening up of the Chinese financial market, Zhu Guangyao, the country’s vice minister for finance, told reporters in Beijing yesterday.
“A nervous peace prevails in the financial markets as central banks sit on their throne, fingers at the ready on the liquidity switch,” Bhanu Baweja, head of emerging-markets cross-asset strategy in London at UBS AG, wrote in a research note. “As they have explicitly targeted risk premia in addition to rates, a lot more hangs on the monarchs of monetary policy today than it has in previous cycles.”
Fed Chair Janet Yellen said July 2 that concerns over financial stability shouldn’t prompt a change in current policy.
The S&P 500 fell 0.4 percent to 1,977.65 in New York from an all-time high, while the Russell 2000 Index of smaller companies tumbled 1.8 percent, the most since April 25. U.S. markets resumed from a three-day weekend after stronger-than-forecast employment data July 3.
FTSE Outlook
After yesterday weakness, the FTSE, Dax and S&P are all at the bottom of their 10 day Raff channels; and we have the 10 day Bianca at 6799. If the bulls are going to avoid a significant drop then they need to bounce it today and break through 6834, as we have the daily pivot at 6835. A break of that level suggests 6850 and 6864 as resistance levels for today.
Support wise, 6817 and 6805 look the near term levels, though there is that Bianca 6799 probably in play on any weakness. Since hotting 6820 then the 10 minute chart has just bumbled along not really doing much, though the 30 minute EMAs are a bit closer for a possible cross shortly.
I think my stance today is brave longs at 6805 to target for 6850 and 6864. It would need a stop at 6794, just below the Bianca channel. If these support levels break then the bears have broken the upside and I don’t expect the FTSE to be reaching 6900+ anytime soon. A lot of the US movement later will be results driven of course as they will be using them as a bellwether for the state of the economy.