After three days of strong declines European markets look set to open on a slightly more stable footing this morning in contrast to US markets finishing lower late on
This is due to Asia markets showing some signs of stabilisation
, despite persisting concerns about emerging market tensions and growth worries, amidst a gradual realisation that company forward earnings projections have been, by and large, a little on the high side.
These earnings concerns even extended to technology bellwether Apple
which was unable to shake the gloom, despite beating expectations on both Q1 revenues and profits, investors took fright after the company revised its Q2 outlook down from $46bn to $42-$44bn.
The company also followed sector peer Samsung in shifting lower than expected handset volumes, but still managed to shift a quarterly record of 51m iPhones.
Despite being a record, it was significantly below market expectations of 55m, and in the process sent the shares sharply lower, wiping billions of the market cap in post market trading. I guess there’s just no pleasing some people, when a $2bn revision on revenues sees a drop of over $30bn in market cap in after-hours trading!
Having seen the Reserve Bank of India raise rates by 25 basis points overnight
to a prop up its ailing currency, attention now turns to today’s extraordinary meeting by the Turkish Central Bank as they meet today
to discuss further measures to prop up the ailing lira. Will they follow India’s example and raise rates or implement other measures?
Today’s UK GDP numbers are expected to show that the UK economy expanded at 0.7% in Q4,
which would equate to an annualised growth rate of 2.8%, the best annualised number since the first quarter of 2008.
With unemployment showing further falls last week, optimism is growing that this fourth consecutive quarter of growth will be sustained into 2014.
Despite last month’s blow out retail sales numbers of 2.6%, doubts remain about the resilience of the recovery given much of it has been consumer led
, particularly as we head into Q1, given that average incomes continue to lag inflation, even though the gap is gradually converging.
This week’s consumer credit numbers could go some way to confirming those doubts
, but there is no doubt businesses are turning more confident with various independent surveys pointing in that direction.
It would therefore be welcome to see evidence of a rise in business investment
to help push the recovery along, as well as starting to see wages outstripping inflation after several years of the opposite.
While the UK economy appears to be ticking along nicely, the US economy is also doing the same thing as this week’s two day Fed meeting gets under way
with the US central bank widely expected to announce a further $10bn tapering of asset purchases tomorrow evening.
Given recent price action on US bond markets, concerns about the possibility of a taper this week appear to be well down the list of market concerns at the moment.
Today’s US durable goods orders for December
are expected to show a rise of 1.8%, down slightly from 3.4% in November,
though there is a chance given the poor weather in December we could see the numbers undershoot expectations.
January consumer confidence
is also expected to decline slightly to 78 from 78.1 in December
; however these numbers have tended to be extremely hit and miss in recent months, given the sharp rise seen in December, from November’s 70.4. Despite this sharp jump in consumer confidence, retail sales went the other way, sliding back between November and December, from 0.4% to 0.2%.
– the upside continues to be capped above the 1.3700 level, despite various attempts to push above it in the past couple of days.
Long term trend line resistance remains at 1.3865 from the all-time highs at 1.6040 and ultimately this remains the key obstacle to a move through 1.4000.
Support now looks pretty solid around the 1.3500 area and only a move below negates a potential retest of the highs.
– the failure to break below the 1.6480 level has prompted a pullback after Friday’s drop from the two and half year high at 1.6665. The key day reversal remains valid, while below last week’s high, and continues to suggest we may not see a move towards the 2011 highs at 1.6745. Only a break below 1.6480, would suggest a move towards 1.6300.
Only a break below 1.6250 signals a top is in and the potential for a move lower towards 1.6000.
– yesterday’s failure at the 0.8300 level has prompted a pullback but the bullish engulfing day remains valid whilst above the 0.8200 area. The key resistance remains towards 0.8330 and trend line resistance from last August highs at 0.8400.
The major support remains at the 0.8160/70 level which is the 61.8% retracement of the entire up move from 0.7755 to the 2013 highs at 0.8815, and a new one year low.
– having found support at 101.80 the current rebound needs to see a move beyond 103.80 to suggest a move back towards 105.50. A close below 102.00 the 38.2% retracement of the up move from 96.55 to the peaks at 105.50 could well see a move towards the 101 area, the 50% level.
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