FTSE says hello to 6000 again

In mid-morning trading the FTSE 100 is 60 points higher, but it remains unable to push on above 6000.

London Stock Exchange
Source: Bloomberg

The Bank of Japan (BoJ) completed the trio of central bank meetings that over the past week or so have kept investors enthralled. The statements from the European Central Bank, the Federal Reserve and the BoJ have not been quite like the great actions of old, when the merest utterance could send markets flying higher, but they have been enough to enable stock markets to add to gains as the recovery off the January lows goes on.

The bounce in Vedanta shares has lasted barely 90 minutes – a suitably dense production report, designed perhaps to deter too much close inspection, helped the shares to surge initially, but as reality set in the gains were given back as the rest of the sector fell into the red. Miners have been some  of the chief beneficiaries of the rally over the past week, but if the sector begins to sag it will point to tough times ahead for the broader index.

First-quarter US GDP figures are the highlight of the day on the economic front, with markets hoping the number can dispel some of the gloom created by yesterday’s abysmal durable goods report.

Amazon’s earnings last night failed to live up to the standards set by Facebook and Netflix, and while, in the longer term, it is still hard to argue with the bull case given the dominance of the online firm, the risks of chasing high-growth stocks in such a nervy environment have been effectively demonstrated.

US markets finished up the session with passable gains, and as a result we expect the Dow Jones to start at 16,227, up 158 points from Thursday’s close. 

London risers and fallers
 

Name % change Index points
HSBC 1.7 6.12
British American Tobacco 1.87 5.09
Vodafone 1.58 3.5
BT 2.18 3.29
AstraZeneca 1.32 2.81

 

Name % change Index points
Rio Tinto -2.03 -1.64
Royal Dutch Shell A -0.64 -1.45
BHP Billiton -2.37 -1.31
Royal Dutch Shell B -0.84 -1.07
Glencore -1.89 -0.77

Key charts to watch

FTSE 100
The FTSE eyes 6000 again as the rally that has been in place since last week continues, although it is losing a bit of momentum. An hourly close above 6000 will be a bullish indicator, and 6027 will be the next big resistance mark to watch. 

FTSE chart

USD/JPY
The USDJPY has managed to hang on to most of its gains after the surge overnight post BoJ announcement that interest rates will turn negative. The currency pair has been in an upward trend for over a week and Y121.42 is the next major resistance level to watch. Support will come into play at Y119.98, but if we see an hourly close below it that will be a bearish sign and $119.07will be the next big support level. 

USD/JPY

Gold
Gold's rally is starting to wane as cash is being poured into the equity markets.  Trend line support will come into play at $1110, and an hourly close below it will be a bearish sign, and $1103 is the next big support level. Rallies in gold will run into resistance at $1123 and $1128. 

Gold

The day ahead: economic data
1.30pm – US GDP (Q4, first estimate): exp 0.8%, prior 2%

1.30pm - Canada GDP (Q4, advance): MoM exp 0.3%, prior 0.0%. YoY exp 0.2%, prior -0.2% 

3pm – US University of Michigan consumer sentiment (January): exp 93, prior 93.3

US economic data
Quarterly earnings Honeywell International, Mastercard, Colgate-Palmolive, American Airlines Group, Chevron, Xerox, Whirlpool Corp

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