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Merger and Acquisition Activity Supports Stock Index Futures

by Archer Financial Services | Oct 29, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are higher due to merger and acquisition activity, along with encouraging earnings reports.

U.S. stock index futures were also supported by European stocks, which were modestly higher in spite of the political risks in Germany, Italy and the U.K., which continue to weigh on investor sentiment.

China’s stocks tumbled with the Shanghai Composite falling 2.2% after weaker industrial profit data and additional signs of slowing economic growth in the world's second largest economy.

U.S. personal income increased 0.2% in September, which compares to the anticipated 0.3% gain. 

Personal consumption expenditures, which is a measure of household spending, increased a seasonally adjusted 0.4%, as estimated in September from the prior month.  

The 9:30 central time October Dallas Federal Reserve manufacturing survey is expected to show 28.

The next advance for stock index futures will take place when central banks around the world that are hawkish, such as the Federal Reserve, realize they need to be less aggressive in hiking interest rates and those central banks that are still accommodative will need to remain accommodative longer.

The first Fed official to moderate policy tone was Dallas Federal Reserve President Robert Kaplan late last week when said he is very sensitive to not being rigid or pre-determined about the pace of rate hikes.

 

CURRENCY FUTURES

The U.S. dollar was supported by higher equity markets and stronger than expected earnings reports, although the gains were limited by the weaker than anticipated personal income report.

The euro currency is lower in light of the ongoing rift between the E.U. and Italy concerning the proposed expanded Italian budget deficit.

The Canadian dollar and the Australian dollar are lower due to weaker crude oil prices.      

 

INTEREST RATE MARKET FUTURES

The thirty year Treasury bond futures advanced to a four week high in the overnight trade, before profit taking came into the market.

Chicago Federal Reserve Bank President Charles Evans will speak at 8:45.

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 73%, which compares to 74% on Friday. Two weeks ago the probability was in the 85% area.

I am now only neutral on the interest rate futures markets, as it appears that the global economy is slowing and central banks that are hawkish, such as the Federal Reserve, will become less hawkish next year and those central banks that are accommodative will have to remain accommodative longer.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2655.00      Resistance    2706.00

 

December 18   U.S. Dollar Index

Support    96.020        Resistance    96.540

 

December 18   Euro Currency

Support    1.13950      Resistance    1.14760

 

December 18   Japanese Yen

Support    .89210        Resistance    .89870

 

December 18   Canadian Dollar

Support    .76240        Resistance    .76630

 

December 18   Australian Dollar

Support    .7073          Resistance    .7127

 

December 18   Thirty Year Treasury Bonds

Support    138^28       Resistance    139^30

 

December 18   Gold

Support    1227.0        Resistance    1241.0

 

December 18   Copper

Support    2.7250        Resistance    2.7850

 

December 18   Crude Oil

Support    66.68          Resistance    68.19


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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