By Alan Bush | Senior Financial Economist at ADMIS
STOCK INDEX FUTURES
Stock index futures are sharply higher due to easing trade fears when Chinese President Xi Jinping pledged to significantly broaden market access this year.
The Chinese president promised to open the country’s economy and said China would increase the foreign ownership limit in automobile, shipbuilding and aircraft sectors “as soon as possible.”
Producer prices in the U.S. increased .3% in March from a month ago, which is the latest indication that inflation pressures may be building in the economy. Economists had expected a .1% increase.
Producer prices, excluding the often-volatile food and energy categories, increased .3% in March from the prior month. Economists had expected a .2% increase for prices excluding food and energy.
The 9:00 central time February wholesale trade report is expected to show a 1.1% increase.
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.
According to Thomson Reuters I/B/E/S, analysts are expecting quarterly earnings for S&P 500 companies to increase 18.5% from a year ago.
Although the global trade situation remains the dominant influence, some traders appear to be gradually shifting their focus of attention more toward earnings and the still accommodative global interest rate environment.
The U.S. dollar declined as traders scaled back expectations that China will use the yuan's value as a weapon in a trade war against the U.S.
Flight to quality longs are being liquidated in the Japanese yen in light of apparently easing trade tensions between the U.S. and China.
Higher crude oil prices supported the Canadian dollar and the Australian dollar. However, gains in the Canadian dollar were limited by news that building permits in Canada fell 2.6% in February from January.
INTEREST RATE MARKET FUTURES
Futures are lower as flight to quality longs are being liquidated as a result of the easing of global trade tensions, along with the increasing probabilities of a fed funds rate hike in June.
The Treasury will auction three year notes today.
Atlanta Federal Reserve Bank President Raphael Bostic will speak at 5:30 this afternoon.
The probability of a fed funds rate hike from the Federal Open Market Committee at the June 13 meeting is 85%, which is unchanged from yesterday.
SUPPORT AND RESISTANCE
June 18 S&P 500
Support 2608.00 Resistance 2663.00
June 18 U.S. Dollar Index
Support 89.110 Resistance 89.770
June 18 Euro Currency
Support 1.23530 Resistance 1.24480
June 18 Japanese Yen
Support .93570 Resistance .94240
June 18 Canadian Dollar
Support .78710 Resistance .79270
June 18 Australian Dollar
Support .7683 Resistance .7758
June 18 Thirty Year Treasury Bonds
Support 145^8 Resistance 146^16
June 18 Gold
Support 1329.0 Resistance 1348.0
May 18 Copper
Support 3.0650 Resistance 3.1350
May 18 Crude Oil
Support 63.15 Resistance 64.98
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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