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U.S.-China Trade Talks Next Week

by Archer Financial Services | Feb 06, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. and Chinese officials will start another round of trade talks in Beijing next week. The U.S. delegation is scheduled to begin arriving in Beijing over the weekend.

Approximately 71% of over half of the S&P 500 companies that have reported fourth quarter results have exceeded profit expectations, according to Refinitiv.

However, analysts are reducing their earnings expectations for the first quarter of 2019.

Stock index futures have been performing better than the news would suggest lately, with the S&P 500 enjoying its best January in more than 30 years, which should be viewed as a sign of strength.

 

CURRENCY FUTURES

The U.S. dollar advanced by default. Although the U.S. dollar is a little higher today, it has underperformed the news in recent weeks.

The euro currency is lower over worries that the euro zone economy is struggling. 

German factory orders in December fell 1.6%, the steepest decline in six months, contributing to a 7% drop on an annualized basis.

The Bank of England is scheduled to meet tomorrow and is widely expected to keep interest rates unchanged.

The Canadian dollar is lower in spite of news that Canadian building permits unexpectedly climbed 6% in December, marking the fourth consecutive monthly increase. Market expectations were for a 1% drop.

The Australian dollar fell after the Reserve Bank of Australia’s central bank chief signaled a shift to a neutral stance on policy and opened the door for a possible rate reduction in a sudden shift from its long standing tightening bias.

It was only just yesterday that the RBA had steered clear of an easing signal following its policy meeting and issued an upbeat statement.

In spite of lower prices today, longer term the Canadian dollar and the Australian dollar should trend higher, as industrial commodity prices are likely to increase in price.

 

INTEREST RATE MARKET FUTURES

They Treasury will auction ten year notes today.

At 5:05 central time Federal Reserve Board Vice Chairman for Supervision Randal Quarles will deliver a speech about the Federal Reserve stress testing.

At 6:00 Federal Reserve Chairman Jerome Powell will host a town hall meeting with educators from across the country.

Financial futures markets are predicting an 84% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year.

There is a 4% chance of an increase in the fed funds rate by 25 basis points, and there is a 12% probability of a 25 basis point rate cut in 2019.

Futures will probably drift lower, as optimism for a U.S.-China trade deal is likely to increase.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2722.00      Resistance    2741.00

 

March 19 U.S. Dollar Index

Support    95.710        Resistance    96.050

 

March 19 Euro Currency

Support    1.14110      Resistance    1.14550

 

March 19 Japanese Yen

Support    .91080        Resistance    .91630

 

March 19 Canadian Dollar

Support    .75710        Resistance    .76300

 

March 19 Australian Dollar

Support    .7111          Resistance    .7256

 

March 19 Thirty Year Treasury Bonds

Support    145^16       Resistance    146^12

 

April 19 Gold

Support    1312.0        Resistance    1326.0

 

March 19 Copper

Support    2.8100        Resistance    2.8550

 

March 19 Crude Oil

Support    52.59          Resistance    54.27


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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