By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures declined as the Trump-Kim summit ended without progress and the India-Pakistan tensions remain.
On an upbeat note, U.S. Trade Representative Lighthizer told a congressional committee yesterday that the U.S. and China are moving closer to a trade agreement and that any new U.S. tariffs on China would be delayed from the March 1 timetable.
There was limited market reaction on news that the U.S. fourth quarter gross domestic product increased at a 2.6% at an annual rate. Economists expected a 2.2% reading.
Initial weekly U.S. jobless claims increased 8,000 to 225,000 in the week ended February 23, which compares to consensus expectations for initial claims to be 220,000.
The 8:45 central time February Chicago PMI is expect to be 56.1.
The February Kansas City Federal Reserve manufacturing index will be released at 10:00. Last month the index was 5.
Stock index futures have been performing better than the news would suggest since the lows were made in late December, which should be viewed as a sign of long term strength.
I would not be surprised to see a recovery from the current lower levels to higher on the day.
The U.S. dollar fell to a new three week low in the overnight trade. The greenback remains lower in spite of the bullish increase in the U.S. gross domestic product report.
The euro currency firmed on news that German inflation edged up in February. Consumer prices rose 0.5% on the month and by 1.6% on the year. Economists forecast a gain of 0.5% on the month and a rise of 1.5% on the year.
The Canadian dollar fell on news that Canadian producer prices unexpectedly fell 0.3% in January. Market expectations were for the producer price index to climb 0.1%.
The Australian dollar is holding up well in spite of news that China’s February factory activity declined to three year low, while export orders were the worst in a decade.
Longer term, the Canadian dollar and the Australian dollar, the “commodity currencies,” will probably trend higher, as prices for most industrial commodities are likely to advance.
Federal Reserve Vice Chair Richard Clarida said the central bank should be patient and data dependent in its approach to monetary policy.
Federal Reserve speakers today are Philadelphia Federal Reserve Bank President Patrick Harker at 11:15 and Dallas Federal Reserve Bank President Robert Kaplan at 12:00.
Financial futures markets are predicting an 85% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 2% chance for a 25 basis point increase in 2019 and there is a 13% probability of a 25 basis point reduction this year.
The thirty year Treasury bond futures have remained in a broad trading range since the first week in January. A U.S.-China trade agreement, or strong hint of one, would be a catalyst to take futures lower.
I will be out of the office on Friday, March 1.
March 19 S&P 500
Support 2780.00 Resistance 2798.00
March 19 U.S. Dollar Index
Support 95.660 Resistance 96.110
March 19 Euro Currency
Support 1.13770 Resistance 1.14440
March 19 Japanese Yen
Support .90010 Resistance .90550
March 19 Canadian Dollar
Support .75710 Resistance .76200
March 19 Australian Dollar
Support .7114 Resistance .7178
March 19 Thirty Year Treasury Bonds
Support 145^0 Resistance 146^4
April 19 Gold
Support 1315.0 Resistance 1331.0
May 19 Copper
Support 2.9300 Resistance 2.9800
April 19 Crude Oil
Support 56.21 Resistance 57.43
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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