By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures are higher as traders detected a subtle change in China's rhetoric, which appeared to be a possible softening of its response to President Donald Trump’s tariff threats. China’s Commerce Ministry held off on detailing exactly how it plans to retaliate against President Trump’s latest plans to impose tariffs on $200 billion of Chinese products.
Initial jobless claims decreased 18,000 to a seasonally adjusted 214,000 in the week ended July 7. Economists expected 225,000 new claims last week.
U.S. consumer prices increased for a third straight month in June. The consumer price index rose .1% from the previous month, which compares to expectations of a gain of .2%. Consumer prices, excluding the volatile food and energy sectors, increased .2%, as anticipated.
Second quarter earnings season kicks off in earnest tomorrow when major U.S. banks report.
Analysts are predicting earnings for S&P 500 companies will increase from between 20% to 21% for the second quarter, which is slightly higher than what was forecast in April.
U.S. stock index futures are holding up well in spite of the ongoing global trade uncertainties.
The U.S. dollar declined when the slightly smaller than expected increase in the U.S. consumer price index was reported.
The euro currency is a little lower after the European Commission cut its growth forecast for Germany's economy, citing global trade tensions. The Commission now predicts real gross domestic product will increase 1.9% in 2018 and in 2019, which compares to the previous prediction of 2.3% growth for this year and 2.1% growth for next year.
Longer term, the euro currency should be supported by speculation that the European Central Bank could increase its key interest rate in July 2019. Previously the consensus view was that the ECB could hike rates in the fall of next year.
Interest rate differential expectations continue to turn a little more supportive to the euro and slightly less favorable to the U.S. dollar.
Higher crude oil prices supported the Canadian dollar and the Australian dollar.
Futures are lower due to flight to quality long liquidation. However, the selling was limited by the bullish influence of the smaller than expected increase in the consumer price index.
The Treasury will auction thirty year bonds today.
Philadelphia Federal Reserve Bank President Patrick Harker will speak at 11:15 and Minneapolis Federal Reserve Bank President Neel Kashkari will speak at 7:00 this evening.
The probability of a fed funds rate hike at the Federal Open Market Committee’s September 26 meeting is 87%, which is unchanged from yesterday.
Although flight to quality buying is likely to come in from time to time, the longer term trend for futures is lower.
September 18 S&P 500
Support 2769.00 Resistance 2797.00
September 18 U.S. Dollar Index
Support 94.350 Resistance 94.840
September 18 Euro Currency
Support 1.17010 Resistance 1.17560
September 18 Japanese Yen
Support .89030 Resistance .89660
September 18 Canadian Dollar
Support .75670 Resistance .76220
September 18 Australian Dollar
Support .7351 Resistance .7418
September 18 Thirty Year Treasury Bonds
Support 144^26 Resistance 145^16
August 18 Gold
Support 1240.0 Resistance 1251.0
September 18 Copper
Support 2.7300 Resistance 2.7950
August 18 Crude Oil
Support 70.27 Resistance 71.55
For more information about these markets, please contact Alan at 312.242.7911 or via email at firstname.lastname@example.org. 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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