FTSE 100 Index called to open -10pts at 7520, back from a trio of overnight tests of 7535 but, importantly, still holding above Friday’s 7515 breakout level, suggesting a consolidation pause to digest last week's rebound. Bulls require a break above 7540 to give hope of a rally back towards June’s 7600 record high. Bears need a breach of 7515 to open the door for a retreat towards 7400. Watch levels: Bullish 7540, Bearish 7515 (unchanged).
Calls for a negative open stem from slower than expected China exports and imports growth weighing on sentiment in Asia overnight, notably down under given that Australia is China’s biggest trading partner. This morning we also had disappointing German trade data suggesting both import and export contraction that may hamper the DAX following yesterday’s poor Industrial production print. In addition, a weaker USD means some unwelcome GBP and EUR strength to hold back the FTSE and DAX, respectively.
A pause for the iron ore rally is offset to some extent by copper still testing multi-year highs, Oil looking perkier ahead of tonight’s US API data and aluminium extending yesterday’s jump, all helping Aussie ASX miners fare better than expected after the China data. Financials down under are also suffering from a major bank’s reaction to money laundering allegations while Japan’s Nikkei is hindered by a slightly stronger Yen, but helped by higher oil prices supporting Energy.
FTSE corporate news this morning includes insurer Standard Life (merging with Aberdeen Asset Management) H1 pre-tax profit down but dividend raised. After the gaming giant said its CEO was leaving, Paddy Power Betfair announces results in-line with guidance and hikes its dividend. Housebuilder Bellway expects FY revenues +13% on completions +11% and an order book +16%. InterContinental Hotels revenues and profits rise and it has raised its dividend.
US markets closed with modest gains, the Dow Jones notching up yet another record closing high, hindered by Oil but also helped by M&A speculation (Rockwell takeover by United Technologies?) and supportive rhetoric from Fed doves Bullard & Kashkari after Friday’s jobs report.
Gold has benefited overnight from a continued easing by the US dollar following Friday’s jobs report and poor China trade data. This has extended the bounce from $1255 support, back to test $1260, although we note August falling highs resistance lurking around $1267.
Crude Oil prices remain around yesterday’s highs, helped too by the weaker USD but also hindered by a combination of August falling highs resistance just above, disappointing China trade data and uncertainty as to how the Abu Dhabi OPEC meeting on production cut compliance will conclude today.
Today’s calendar focus is limited to US NIB Small Business Optimism (11am), forecast to continue creeping lower (103.5 vs 103.6 prev.) from its 13yr peak at the turn of the year (105.9). The only other data point of note is US JOLTS Job Openings, expected to have increased (5.7m v 5.666m prev.), recovering some of last month's drop from an all-time 16yr high (6m).