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Strong Earnings Reports Support Stock Index Futures

by Archer Financial Services | Jul 30, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Futures are mixed to higher due to better than expected corporate earnings reports.

The 9:00 central time June pending home sales index is anticipated to be up .8% and the 9:30 July Dallas Federal Reserve manufacturing survey is estimated to be 32.

Earnings at S&P 500 companies are now expected to have increased 22.6%, which is higher than the estimate of 20.7% as of July 1, according to Thomson Reuters.

Of the 265 S&P 500 companies that have reported earnings so far, 82.3% surpassed analysts’ estimates.

Over all, U.S. stock index futures continue to be supported by the still relatively low global interest rate environment and the mostly stronger than estimated U.S. corporate earnings reports.

  

CURRENCY FUTURES

The Bank of Japan ends a two day policy meeting tomorrow. The Federal Reserve concludes its meeting on Wednesday and the Bank of England is expected to raise interest rates on Thursday.

The U.S. dollar is lower and the euro currency is higher on news that inflation in Germany remained above 2% in July, as expected.

The annual inflation rate came in at 2.1%, according to the Federal Statistical Office, which was in line with economists' forecasts.  

In recent weeks interest rate differential expectations are turning slightly less favorable to the U.S. dollar and slightly more favorable to the euro.

The Japanese yen is lower in spite of news that Japan’s retail sales rebound strongly in June after declining in May.

 

INTEREST RATE MARKET FUTURES

Futures are lower with the thirty year Treasury bond futures falling to a 10 week low.

The Federal Reserve meets on Tuesday and Wednesday and is expected to keep interest rates unchanged and reaffirm its outlook for additional rate hikes. The market has almost fully priced in a September increase and may hike rates again before the end of the year.

The probability of a fed funds rate hike at the Federal Open Market Committee’s September 26 meeting is 91%, which is unchanged from Friday. 

Although flight to quality buying is likely to come into the market from time to time, the longer term trend for futures is lower, especially for the thirty year Treasury bonds.

 

SUPPORT AND RESISTANCE

September 18   S&P 500

Support    2804.00      Resistance    2824.00

 

September 18   U.S. Dollar Index

Support    94.150        Resistance    94.670

 

September 18   Euro Currency

Support    1.16770      Resistance    1.17540

 

September 18   Japanese Yen

Support    .90160        Resistance    .90550

 

September 18   Canadian Dollar

Support    .76460        Resistance    .76840

 

September 18   Australian Dollar

Support    .7376          Resistance    .7411

 

September 18   Thirty Year Treasury Bonds

Support    142^2         Resistance    143^0

 

August 18   Gold

Support    1216.0        Resistance    1226.0

 

September 18   Copper

Support    2.7500         Resistance    2.8200

 

September 18   Crude Oil

Support    68.67          Resistance    70.55


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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