By Alan Bush | Senior Financial Economist at ADMIS
Global equity markets are mostly lower. Stock markets in China fell the most since February, as fears of an escalating trade war with the U.S. could reduce China’s economic growth.
China's Shanghai composite fell 3.7%, which was the biggest one day drop since February.
China’s stock markets were lower even though the People’s Bank of China on Sunday cut the level of cash that banks must hold as reserves, as policymakers continue to worry about the fallout from the tariff issues with the U.S.
The bearish stock market reaction to the bullish reserve requirement ratio cut suggests the market doesn’t believe the additional economic stimulus to China’s economy was enough to halt the slowdown in China’s economy.
European stock markets were lower as investors were unsettled by a weaker than expected industrial output report from Germany.
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 U.S. dollar is higher in a flight to quality bid in light of weaker global equity markets.
The euro currency is lower due to weak industrial output figures from Germany.
The euro was also pressured by renewed concerns over Italy’s budget deficit. Italy’s Deputy Prime Minister Matteo Salvini said the government would not cave to market pressure and backtrack from its plans to increase deficit spending in 2019.
In the overnight trade the thirty year Treasury bond futures fell to the lowest level since August 2014. Futures are lower today in spite of mostly bullish news.
St. Louis Federal Reserve Bank President James Bullard today said that any further interest rate increases in U.S. this year should depend on data, but indicators were "looking good."
According to the financial futures markets, the probability of a fed funds rate hike at the Federal Open Market Committee’s December 19 policy meeting is 80%, which compares to 83% on Friday.
The long term trend for futures is lower, especially for the thirty year Treasury bond futures, 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 2875.00 Resistance 2901.00
December 18 U.S. Dollar Index
Support 95.180 Resistance 95.750
December 18 Euro Currency
Support 1.15110 Resistance 1.16010
December 18 Japanese Yen
Support .88150 Resistance .88850
December 18 Canadian Dollar
Support .76900 Resistance .77450
December 18 Australian Dollar
Support .7037 Resistance .7085
December 18 Thirty Year Treasury Bonds
Support 136^16 Resistance 137^16
December 18 Gold
Support 1184.0 Resistance 1211.0
December 18 Copper
Support 2.7300 Resistance 2.7800
November 18 Crude Oil
Support 73.02 Resistance 74.77
For more information about these markets, please contact Alan at 312.242.7911 or via email at firstname.lastname@example.org. 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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