Support 6568 6568 6522 6400 6391 6259
Resistance 6627 6632 6681 6715 6725 6749

Good morning. The bull run continued last Friday as we passed 6600 after hours before dropping back a bit and testing the pivot last night at 6568. The fall out from the Brexit vote continues to dominate the news, as well as the political chaos from it. The thought of rate cuts and stimulus has certainly helped fuel the market since the vote result, but quite a few are wondering (myself included) if its not just a pumping exercise post Brexit vote – to keep the masses happy. The US is today for their independence day holiday – usually means a fairly flat day on the FTSE but maybe not today if the recent volatility resumes! The top of the 20 day Bianca is 6627 today so worth watching that level for a reaction initially.

US & Asia Overnight from Bloomberg

Asian stocks rallied for a fourth day and most commodities advanced, led by gains in precious metals amid expectations that central banks in the world’s leading economies will add to monetary stimulus.

The MSCI Asia Pacific Index built on its biggest weekly advance since April, with raw-materials producers at the forefront of the rally, as U.S. and U.K. equity index futures rose. Silver exceeded $20 an ounce for the first time in two years and gold climbed for a fourth day. Nickel held near an eight-month high amid concern output will be disrupted in the Philippines, while Brent crude stayed above $50 a barrel. Australia’s bonds fell after a national election at the weekend failed to deliver a conclusive winner.

The U.K.’s June 23 vote to leave the European Union has fueled expectations that central banks in Europe and Japan will add to monetary easing, while killing off speculation that the Federal Reserve will boost interest rates this year. Global equities last week rallied by the most in four months as policy makers worldwide sought to reassure investors they would take steps to limit the economic fallout of so-called Brexit and ensure financial markets keep functioning. The securities tumbled by the most since 2008 on the day after Britain’s referendum.

“While the potential for increased liquidity from central banks has helped calm stock markets, there’s still a lot of uncertainty out there,” said Nicholas Teo, a trading strategist at KGI Fraser Securities in Singapore. “With China still on a slowdown, U.S. recovery tentative and the messy U.K.-EU divorce, volatility will remain heightened.”

China’s official factory gauge retreated to the dividing line between improvement and deterioration last month, while a measure of services perked up, underscoring the two-speed pace of growth in the world’s second-largest economy, weekend data showed. A Bank of Japan report on Monday revealed the nation’s companies cut their forecasts for inflation for five years’ time, adding to pressure on the central bank to boost stimulus. Financial markets in the U.S. and Indonesia are shut for holidays.

Stocks

The MSCI Asia Pacific Index gained 0.6 percent as of 1:06 p.m. Tokyo time, following on from last week’s 3.5 percent rebound. Hong Kong’s Hang Seng Index climbed 1.5 percent, wiping out its losses that followed the U.K.’s referendum.

Jiangxi Copper Co. jumped as much as 8.5 percent in Hong Kong and Sumitomo Metal Mining Co., Japan’s biggest nickel supplier, surged more than 6 percent in Tokyo. China Vanke Co., the developer whose reorganization proposal is being stymied by a battle for control, plunged by the 10 percent daily limit in Shenzhen as its shares resumed trading for the first time this year.

Futures on the S&P 500 rose 0.1 percent and contracts on the U.K.’s FTSE 100 Index were up 0.4 percent. British stocks are poised to provide investors with a big “entry point” after dropping to an almost four-decade low relative to other developed markets, according to Michael Hartnett, chief investment strategist at Bank of America Corp.’s Merrill Lynch unit.

Commodities

Silver soared as much as 7 percent, its biggest intra-day gain since 2014, before paring its advance to 2.8 percent. Holdings in silver-backed exchange traded funds expanded to a record last month, and assets in gold ETFs are now at the highest since August 2013. Bullion rose 0.4 percent on Monday.

“Brexit has created all sorts of fear and loathing across markets,” Commonwealth Bank of Australia analysts, including Tobin Gorey, wrote in a July 4 note, adding that investors are cutting back on risk. “Gold and silver, as we would expect, benefit the most from safe-haven demand flows.”

Brent crude was little changed at $50.38 a barrel, while West Texas Intermediate traded near $49. A militant group operating in Nigeria’s southern oil-producing region said it attacked five crude-pumping facilities overnight Sunday, dealing a blow to the government’s effort to enforce a cease-fire.

Nickel, which is used in the production of stainless steel, was steady near $10,000 a ton in London. It surged 5.6 percent on Friday after the Philippines announced plans to audit all mining operations, threatening to curb supplies from the southeast Asian country. Less than a third of miners operating in the nation are compliant with international standards for responsible mining, according to the government.

Rubber futures climbed as much as 3.9 percent in Tokyo, buoyed by shrinking stockpiles after rains disrupted production in Thailand.

Currencies

The British pound rose 0.1 percent versus the dollar, its first gain in three days. The currency tumbled 8.1 percent in June, the most since 2008, as the U.K.’s decision to leave the EU caught investors by surprise and prompted Prime Minister David Cameron’s resignation, triggering political upheaval in the country.

Japan’s yen weakened 0.3 percent to 102.78 per dollar. It declined 0.3 percent last week as BOJ Governor Haruhiko Kuroda said more funds could be injected into the market should they be needed. The haven currency touched 99.02 in the wake of the vote for Brexit, its strongest level since 2014.

The Bloomberg Dollar Spot Index held near a one-week low after the U.K.’s referendum outcome pushed out expectations for the timing of the Fed’s next interest-rate increase. Futures indicate a 12 percent chance of a rate hike this year, down from 50 percent on the day of the vote.

South Korea’s won slid 0.3 percent, the biggest loss among 31 major currencies, on speculation the central bank will intervene after the currency led a post-Brexit rally in Asia last week with a 3 percent jump. Appreciation may hurt the nation’s exports, which declined for an 18th straight month in June.

Bonds

The yield on Australia’s 10-year government bonds rose by three basis points to 1.99 percent, after sinking to a record 1.95 percent in the last session. The nation’s inconclusive voting result raises the prospect Prime Minister Malcolm Turnbull’s Liberal-National coalition — or the main opposition Labor Party — will be forced to work with a handful of disparate independent lawmakers in order to stay in power. Ballot counting doesn’t resume until Tuesday.“It looks like another three years of de facto minority government, which is not a great outcome for the economy and investment markets,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages more than $110 billion in Sydney.

The Reserve Bank of Australia is expected to leave interest rates unchanged at a policy review on Tuesday, according to all 27 economists surveyed by Bloomberg. Swaps indicate a better-than-even chance of an easing in August following the next inflation reading. [Bloomberg]

FTSE 100 Outlook and Prediction

We have a couple of decent resistance levels coming into view today at 6627 and around 6720. I expect we will see 6627 fairly quickly this morning as we have had decent overnight strength. The 6627 is off the higher timeframe of the 20 day Bianca so does include the pre-Brexit levels (which is probably why both times it was tested last week it got broken), however it’s again worth a small go and see. If the worm does turn and we stat to drop there is probably a fairly big drop on the cards. For the moment the momentum is still bullish so shorts are counter trend so adjust the risk accordingly. The bears will need to break 6570 today where we have the daily pivot and the 100 Hull MA on the 2 hour chart. Even then, they need to keep it dropping to reverse the bullish moving averages. On the daily chart we have the 25ema at 6259 – so this sort of area might be a decent pullback target. With the US markets closed today for their Independence Day holiday I expect us to still push up a bit higher today, with that 6627 area being the first stumbling block of resistance. Famous last words!?