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Trade Situation Better and Corporate Earnings Reports in Focus

by Archer Financial Services | Apr 10, 2018

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.

 

CURRENCY FUTURES

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 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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