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Expect U.S. Stock Index Futures to Recover from the Early Pressure

by Archer Financial Services | Sep 12, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Global equity markets were mostly under pressure due to ongoing concerns over the trade dispute between the U.S. and China. Stock markets in China extended their slump with the Shanghai Composite Index at its lowest close since January 2016. 

Producer inflation pressure in the U.S. came in below expectations in August. The producer price index declined 0.1% in August following an increase of 0.1% in July. Economists were expecting up 0.2%. The annual PPI also missed the market’s consensus, coming in at 2.8%, which compares to the expected 3.2%.

The September Atlanta Federal Reserve business inflation expectations survey will be released at 9:00 central time. Last month the survey showed 2.1%.

I expect U.S. stock index futures will recover from the current lower levels and trade higher on the day.

The still relatively low interest rate environment remains long term supportive to U.S. stock index futures.

 

CURRENCY FUTURES

The U.S. dollar is lower and the euro currency is higher in spite of news that industrial production in the euro zone declined for the second month.

The European Union's statistics agency said the output of factories, mines and utilities in the euro zone was 0.8% lower in July than in June. This is a larger decline than the 0.4% drop that was anticipated by economists.

The currency of the euro zone is higher even though there are reports that the European Central Bank will trim its economic growth forecasts at its policy meeting tomorrow.

The British pound temporarily declined on reports of a challenge to U.K. Prime Minister May. 

The Canadian dollar gained due to reports that Canada was ready to offer the U.S. limited access to the Canadian dairy market as a concession in negotiations to reshape the North American Free Trade Agreement.

 

INTEREST RATE MARKET FUTURES

The Treasury will auction ten year notes today.

Federal Reserve Board of Governors member Lael Brainard will speak at 11:45.

At 1:00 the Federal Open Market Committee will release its “Beige Book” on the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee.

According to financial futures markets, the probability of a fed funds rate increase at the Federal Open Market Committee’s September 26 meeting is 97%, and the probability of another fed funds rate hike in December is 83%.

The long term trend for futures is lower as the U.S. economy remains strong and the FOMC will likely continue on its tightening path.

 

SUPPORT AND RESISTANCE

September 18   S&P 500

Support    2884.00      Resistance    2898.00

 

September 18   U.S. Dollar Index

Support    94.890        Resistance    95.330

 

September 18   Euro Currency

Support    1.15680      Resistance    1.16220

 

September 18   Japanese Yen

Support    .89530        Resistance    .90000

 

September 18   Canadian Dollar

Support    .76420        Resistance    .76770

 

September 18   Australian Dollar

Support    .7086          Resistance    .7136

 

December 18   Thirty Year Treasury Bonds

Support    142^0         Resistance    142^16

 

December 18   Gold

Support    1194.0        Resistance    1206.0

 

December 18   Copper

Support    2.6000        Resistance    2.6750

 

October 18   Crude Oil

Support    69.41          Resistance    70.45


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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