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Global Trade Tensions Easing

by Archer Financial Services | Apr 09, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES 

Global equity markets turned higher after officials of the Trump administration stressed the trade dispute with China could be resolved through negotiations.       

Analysts also attributed some of today’s gains to news that North Korea told the U.S. for the first time that it is ready to discuss the denuclearization of the Korean Peninsula when North Korean leader Kim Jong Un meets with President Donald Trump.          

First quarter earnings season begins on Friday. Investors are expecting tax cuts to help U.S. corporations show their biggest quarterly earnings growth in seven years.

Analysts are forecasting a 17% increase in earnings for S&P 500 companies in the first quarter compared with a year ago, according to estimates from FactSet.

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

 

CURRENCY FUTURES

The U.S. dollar declined in spite of the increasing probabilities of a fed funds rate hike in June.

The euro currency is higher despite news that German exports fell in February.

Flight to quality longs are being liquidated in the Japanese yen in light of apparently easing trade tensions between the U.S. and China.

Bank of Japan Governor Kuroda said the central bank would eventually need to consider how to normalize its ultra-easy monetary policies.

In addition, he said any exit from easing would be very gradual.

 

INTEREST RATE MARKET FUTURES

Futures are mostly lower as flight to quality longs are being liquidated and due to the increasing probabilities of a fed funds rate hike.

In addition, there was some selling due to a perceived easing of global trade tensions.

The probability of a fed funds rate hike from the Federal Open Market Committee at the June 13 meeting is 85%, which compares to 78% on Friday.

 

SUPPORT AND RESISTANCE

 

June 18   S&P 500

Support    2603.00       Resistance    2632.00

 

June 18   U.S. Dollar Index

Support    89.450         Resistance    90.010

 

June 18   Euro Currency

Support    1.23110       Resistance    1.23910

 

June 18   Japanese Yen

Support    .93570         Resistance    .94090

 

June 18   Canadian Dollar

Support    .78030         Resistance    .78550

 

June 18   Australian Dollar

Support    .7642           Resistance    .7711

 

June 18   Thirty Year Treasury Bonds

Support    145^8          Resistance    146^2

 

June 18   Gold

Support    1327.0         Resistance    1343.0

 

May 18   Copper

Support    3.0300         Resistance    3.0800

 

May 18   Crude Oil

Support    61.85           Resistance    63.55


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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