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Trade War Heats Up, But Indexes Partially Recover

by Archer Financial Services | Apr 04, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES 

There were sharp declines in stock index futures when China quickly hit back against the Trump administration’s plans to impose tariffs on $50 billion in Chinese goods. China retaliated with a list of similar duties on U.S. imports, including soybeans, planes, automobiles, beef and chemicals.

It was recently reported that the Trump administration will unveil by Friday a list of advanced technology imports from China that could be subject to new U.S. tariffs.

There were some recovery gains on news that the March Automatic Data Processing employment change report showed its biggest increase three years, coming in up 241,000, which compares to the estimate of an increase of 185,000.

The 8:45 central time March PMI services index is expected to be 54.1.

The 9:00 February factory orders report is anticipated to show a 1.7% increase and the 9:00 March Institute for Supply Management nonmanufacturing index is estimated to be 59.

Political markets are always the most difficult to trade in any market, which warrants caution.

Ongoing trade issues will probably continue for a while, but will only temporarily pressure futures.  

 

CURRENCY FUTURES

The euro currency is higher due to news of a pick-up in euro zone inflation in March, which keeps the European Central Bank on track with its plans to unwind its huge stimulus program in coming months.

Inflation was 1.4% annualized, which was in line with market expectations and up from 1.1% in February.

I continue to anticipate the double top resistance at the 1.26500 - 1.26580 area in the June euro currency to be taken out, although it may take some time.

In light of the increased trade tensions between the U.S. and China, flight to quality buying is coming into the Japanese yen.

 

INTEREST RATE MARKET FUTURES

Flight to quality buying is coming into the interest rate market futures in light of the increased trade tensions.

Federal Reserve speakers today are St. Louis Federal Reserve Bank President James Bullard at 8:30 and Cleveland Federal Reserve Bank President Loretta Mester at 10:00.

The probability of a fed funds rate hike from the Federal Open Market Committee at the June 13 meeting is 80%, which compares to 85% yesterday.

 

SUPPORT AND RESISTANCE

June 18   S&P 500

Support    2554.00       Resistance    2616.00

 

June 18   U.S. Dollar Index

Support    89.450         Resistance    89.930

 

June 18   Euro Currency

Support    1.23200       Resistance    1.23910

 

June 18   Japanese Yen

Support    .94110         Resistance    .94880

 

June 18   Canadian Dollar

Support    .77850         Resistance    .78440

 

June 18   Australian Dollar

Support    .7661           Resistance    .7725

 

June 18   Thirty Year Treasury Bonds

Support    145^20        Resistance    146^24

 

June 18   Gold

Support    1333.0         Resistance    1355.0

 

May 18   Copper

Support    2.9650         Resistance    3.0750

 

May 18   Crude Oil

Support    61.79           Resistance    63.89

 

For more information about these markets, please contact Alan at 312.242.7911  or via email at alan.bush@admis.com. Thank you.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff.  Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.

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