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Stock Index Futures Likely to Recover from Current Lower Prices

by Archer Financial Services | Oct 02, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures declined following weaker euro zone equity markets. Pressure on euro zone stock markets was linked to increasing political and economic tensions within the European Union. 

Federal Reserve Chairman Jerome Powell will speak at the 60th Annual National Association for Business Economics meeting in Boston at 11:00 central time.

Despite of a variety of ongoing geopolitical issues the still relatively low interest rate environment is dominating and remains long term supportive to U.S. stock index futures.

 

CURRENCY FUTURES

The euro currency is lower after a senior lawmaker, Claudio Borghi, the economics spokesman of Italy’s ruling League party said most of the country’s problems would be resolved if it readopted a national currency. However, clarifying his comments later, Borghi said Italy’s government has no intention of leaving the euro.

As a result of the increasing political tensions within the euro zone, safe-haven buying came into the U.S. dollar, the Japanese yen and the Swiss franc.

Selling pressure on the euro was limited by news that inflation in the euro zone came in stronger than expected.

Euro zone August producer prices increased 0.3%, which compares to the anticipated gain of 0.2%.

The Reserve Bank of Australia kept interest rates unchanged, as expected, at a record low 1.5%, where it has been since the middle of 2016.  

 

INTEREST RATE MARKET FUTURES

In light of the intensifying political and economic tensions in the euro zone, flight to quality longs were established.

According to the financial futures markets, the probability of a fed funds rate hike in December is 81%, which compares to 78% yesterday.

Federal Reserve Vice Chairman Randal Quarles will speak at 9:00 central time.

Flight to quality rallies often last for a short while and should be used as selling opportunities.

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 this year and in 2019.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2915.00      Resistance    2935.00

 

December 18   U.S. Dollar Index

Support    94.800        Resistance    95.440

 

December 18   Euro Currency

Support    1.15650      Resistance    1.16550

 

December 18   Japanese Yen

Support    .88110        Resistance    .88550

 

December 18   Canadian Dollar

Support    .77920        Resistance    .78330

 

December 18   Australian Dollar

Support    .7162          Resistance    .7248

 

December 18   Thirty Year Treasury Bonds

Support    139^16       Resistance    140^18

 

December 18   Gold

Support    1190.0        Resistance    1212.0

 

December 18   Copper

Support    2.7550        Resistance    2.8450

 

November 18   Crude Oil

Support    75.11          Resistance    75.97


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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