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Stock Index Futures Over Performing the News

by Archer Financial Services | Jul 31, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Futures are higher with technology stocks bouncing back.

Personal income in June increased .4% from May, which compares to expectations of a .3% gain and personal consumption expenditures advanced .4% in June from the prior month when a gain of .5% was predicated.

U.S. employment costs increased in the second quarter. The employment cost index, which is a measure of wages and benefits for civilian workers, increased .6% in April through June.  Economists expected the index to increase .7% in the second quarter.

The 8:45 central time July Chicago PMI is estimated to be 62.3 and the 9:00 July consumer confidence report is anticipated to be 127.

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 U.S. dollar is lower and the euro currency is higher in spite of news that euro zone economic growth eased to its slowest pace in two years last quarter.

The euro zone economy grew at a quarterly rate of .3% over the three months ending in June.      

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

The Bank of England is expected to hike interest rates at its policy meeting on Thursday.

The Japanese yen registered its largest daily decline in almost three weeks after the Bank of Japan at its policy meeting promised to keep interest rates low. The BoJ pledged to maintain its short term interest rate target at minus .1% and decided to guide its 10 year debt yields to close to zero percent.

Some market watchers believe Japan's reluctance to change its policy aggressively is a result of its desire to keep its currency competitive.

The Canadian dollar is lower due to weaker crude oil prices. Pressure on the Canadian dollar was limited by a report that showed Canadian producer prices rose for a sixth consecutive month in June. Canada's industrial product price index rose .5% in June, when market expectations were for a .3% increase.

In addition, Canada’s gross domestic product in May grew at the fastest pace in a year.  Canada's gross domestic product increased .5% in May from the previous month. Market expectations were for a .3% advance.

 

INTEREST RATE MARKET FUTURES

The thirty year Treasury bond futures are higher today after yesterday falling to a 10 week low.

The Federal Open Market Committee concludes its two day meeting tomorrow 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    2801.00      Resistance    2824.00

 

September 18   U.S. Dollar Index

Support    93.820        Resistance    94.350

 

September 18   Euro Currency

Support    1.17300      Resistance    1.17980

 

September 18   Japanese Yen

Support    .89520        Resistance    .90690

 

September 18   Canadian Dollar

Support    .76340        Resistance    .77110

 

September 18   Australian Dollar

Support    .7402          Resistance    .7455

 

September 18   Thirty Year Treasury Bonds

Support    142^4         Resistance    143^16

 

August 18   Gold

Support    1212.0        Resistance    1226.0

 

September 18   Copper

Support    2.7650        Resistance    2.8300

 

September 18   Crude Oil

Support    68.67          Resistance    70.43


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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