Good morning. Just a quick email today as its a half day trading, and Im off for the day as well. If the FTSE doesn’t add a decent number of points today it will be the first negative December since 2002! More here. The cynic in me would say expect some bull to avoid the negative headlines going into 2015, however, with it being election year a weak close to 2014 and then a strong start could help…. you can flip it either way really, but slightly favouring the former for a bull day today.
Asia Overnight from Bloomberg
Crude oil resumed its slump, heading for its worst year since 2008 amid speculation U.S. stockpiles data today will fuel concern over a global supply glut. Asian stocks climbed while aluminum and nickel gained.
West Texas Intermediate crude fell 0.9 percent to $53.61 a barrel by 2:18 p.m. in Hong Kong, slipping for the fourth time in five days to trade near a five-year low. The MSCI Asia Pacific excluding Japan Index increased 0.4 percent while Standard & Poor’s 500 Index futures advanced 0.2 percent. Nickel rose 0.1 percent and aluminum climbed 0.8 percent, paring its biggest monthly loss since June 2013. The Bloomberg Dollar Spot Index fluctuated, trimming its 2014 advance to 10.7 percent.
Crude’s 45 percent tumble this year, spurred by the largest U.S. output in three decades and OPEC’s refusal to cut production, has rocked global markets. It fueled the dollar’sbest annual gain since at least 2004 as Americans boosted spending, helped China’s stock market rally the most worldwide and hammered energy-producing nations including Russia, whose ruble had its steepest annual retreat since 1998.
“We’re seeing a divergent impact,” Michael Every, the Hong Kong-based head of Asia Pacific financial-markets research at Rabobank International, said by phone. “Obviously oil stocks have been hit but others, consumer-sector stocks for example, are shrugging it off and seeing it as a positive. On currencies, anybody who is an oil producer is very severely hit.”
Supply Glut
WTI fell today after gaining 1 percent last session, when Brent crude rose less than 0.1 percent to $57.88 a barrel in London. U.S. oil inventories probably rose by 900,000 barrels to 388.1 million barrels last week, according to a Bloomberg survey of energy analysts before today’s Energy Information Administration report. Analysts predict the report will show U.S. supplies rose last week to a record level for the period in data going back to 1982.
“What we’re seeing is that supplies from North America have really outpaced worldwide demand and as a result, we have a supply glut,” Andy Lipow, the president of Lipow Oil Associates LLC in Houston, said by phone. “That of course has put pressure on prices over the last several months and as a result, has dragged down commodities indexes as well.”
A Chinese factory gauge sank to a seven-month low in December, putting pressure on policy makers to provide more support for the world’s second-largest economy.
Chinese Equities
The final reading of the Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was 49.6 this month from 50 in November, compared with a Dec. 16 reading of 49.5. Numbers below 50 indicate contraction. The median estimate of eight analysts in a Bloomberg survey was for 49.5.
The Shanghai Composite Index advanced 1.8 percent. It’s surged 52.3 percent this year, set for its biggest annual gain since 2009 and making it the second-best performer among primary equity indexes this year. Slowing inflation gave the central bank room to cut interest rates for the first time in two years last month. The Hang Seng China Enterprises Index (HSCEI), which tracks mainland Chinese shares listed in Hong Kong, increased 1.2 percent, bringing gains for 2014 to 10.8 percent.
China’s two biggest trainmakers surged after saying they plan to combine in a $12.3 billion share swap. Shares of China CNR Corp. climbed 45.2 percent in Hong Kong, the biggest jump on record, while CSR Corp. (1766) rose 32.3 percent. Both stocks had been halted from trading since Oct. 27. They climbed by the 10 percent daily limit in Shanghai.
S&P 500
While markets in South Korea are closed today, data released in Seoul showed inflation increased a less-than-projected 0.8 percent this month from a year earlier after expanding 1 percent in November.
Australia’s S&P/ASX 200 Index (AS51) closed down 0.1 percent amid volumes 65 percent below their 30-day average.
Indonesia, Thailand and the Philippines are also shut today, while markets in Hong Kong and Singapore closed early. In the U.S., jobless claims data and pending home sales are due.
The S&P 500 slid 0.5 percent in New York yesterday with trading 40.9 percent below the 30-day average. It closed at a record on Dec. 29 for the 53rd time in 2014. The measure has risen 0.6 percent in December, bolstered by the fastest growth for the American economy in more than a decade.
This year, the S&P 500 is up 12.6 percent while the Dow Jones Industrial Average (INDU) has risen 8.5 percent. The Russell 2000 Index (RTY) of small-cap stocks also climbed to an all-time high on Dec. 29 and the Nasdaq Composite Index (CCMP) reached its highest level since March 2000 that day, closing about 5 percent below its record.
Dollar Strength
The gains in U.S. equities come amid declines elsewhere. While the S&P 500 is heading for its third consecutive annual advance, the MSCI All-Country World Index excluding the U.S. is down 6.1 percent for the year after rising in 2013 and 2012.
The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-used currencies excluding the yen, is down 2.7 percent this year, headed for its biggest annual drop since 2008, when it tumbled 5.9 percent.
The yen slipped 0.2 percent to 119.66 per dollar. The Japanese currency is poised for its third straight annual decline as the Bank of Japan embraced monetary stimulus to emerge from more than a decade-long deflation.
Malaysia’s ringgit is poised for its biggest quarterly drop since the Asian financial crisis in 1998 on oil’s slump.
The greenback has strengthened against all of its 31 major peers, with Russia’s ruble posting the worst performance, sinking 42 percent amid oil’s tumble. Russia is the world’s biggest energy exporter.
Nickel, Copper
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, has risen 10.6 percent in 2014 amid speculation the Federal Reserve may raise interest rates in the third quarter as the world’s biggest economy improves. The gauge tracks data going back to 2004.
Spot palladium swung between gains and losses to trade at $803.75 an ounce, taking gains this year to 12.4 percent, the best performance among major precious metals.
Commodities headed for their biggest annual loss since the 2008 global financial crisis. The Bloomberg Commodity Index (BCOM), which tracks 22 products from crude to copper, is down 15.8 percent this year, with crude, gasoline and heating oil the biggest decliners.
Nickel for delivery in three months on the London Metal Exchange is headed for its first annual gain in four years. The metal has advanced 8.5 percent this year, the best performer among the six main metals on the LME.
Copper, little changed today, is poised to decline 14.1 percent this year, its biggest annual decrease since 2011.
FTSE Outlook
The bottom of the 10 day Bianca is 6563 today, and the daily pivot is 6569 so I wouldn’t be surprised if we have a rise back after yesterday has stopped out a few longs. If the bulls can hold above 6566 today then we should get a rise to 6600, and onto 6630 today. Support is 6548 below the pivot/Bianca so if that breaks then probably just riding a short is the way to go. The S&P is on the bottom of its 10 day Raff channel at 2081 and bounce back up, but the FTSE only has till 12:30 to sort its game out! Long bias for me today, though cautious as still low volume.
THanks Nick. Wish you all a very happy new year 2015 🙂
http://youtu.be/RXCbEk60Dgw