By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures advanced, including record highs for Dow Jones futures, following a rebound in European equity markets after Italy indicated it was open to reducing its budget deficits in the coming years.
An Italian government source said the deficit would fall to 2.2% of gross domestic product in 2020 and to 2% in 2021 from the 2.4% proposed earlier.
In addition, there was support from news that the Automatic Data Processing employment change report showed September U.S. private sector jobs increased 230,000, which compares to expectations of up 185,000. In addition, the ADP report said at the current pace of job creation the unemployment rate will fall to the low 3%'s by this time next year.
The 8:45 central time September PMI services index is expected to be 52.9 and the 9:00 September Institute for Supply Management non-manufacturing index is anticipated to be 58.
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.
The euro currency declined after it was reported that euro zone retail sales fell for a second consecutive month in August. The European Union’s statistics agency said retail sales were 0.2% lower in August than in July. The decline in sales was a surprise since economists had expected a small increase.
Some of the pressure on the currency of the euro zone was offset by news that Italy plans to reduce its budget deficit over the next three years.
In light of reduced tensions between the E.U. and Italy, flight to quality longs were liquidated in the Swiss franc and the Japanese yen.
Flight to quality longs were liquidated due to lessened political and economic tensions within the E.U.
According to the financial futures markets, the probability of a fed funds rate hike in December is 82%, which compares to 81% yesterday.
There was little market reaction when Evans of the Federal Reserve said the Federal Open Market Committee should press ahead with gradual rate increases.
Federal Reserve speakers today are Philadelphia Federal Reserve Bank President Patrick Harker at 11:00, Federal Reserve Board of Governors member Lael Brainard at 12:00, Cleveland Federal Reserve Bank President Loretta Mester at 1:15, Federal Reserve Chairman Jerome Powell at 3:00 and Dallas Federal Reserve Bank President Robert Kaplan at 7:00 this evening.
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.
December 18 S&P 500
Support 2923.00 Resistance 2944.00
December 18 U.S. Dollar Index
Support 94.800 Resistance 95.330
December 18 Euro Currency
Support 1.15870 Resistance 1.16690
December 18 Japanese Yen
Support .88180 Resistance .88590
December 18 Canadian Dollar
Support .77920 Resistance .78300
December 18 Australian Dollar
Support .7142 Resistance .7212
December 18 Thirty Year Treasury Bonds
Support 139^16 Resistance 140^18
December 18 Gold
Support 1201.0 Resistance 1215.0
December 18 Copper
Support 2.7950 Resistance 2.8400
November 18 Crude Oil
Support 74.93 Resistance 75.88
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.