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Weaker Chinese Economy

by Archer Financial Services | Mar 05, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures advanced in spite of news that China cut its growth target for 2019 to a 30 year low. However, there is growing optimism that the U.S. and China will reach a trade agreement later this month, possibly at a summit around March 27, given the progress in talks between the two countries.

The 8:45 central time February PMI services index is expected to be 56.2.

Two 9:00 reports are scheduled. The December new home sales report is anticipated to show 590,000 and the February Institute for Supply Management non-manufacturing index is estimated to be 57.2.

Stock index futures have been performing better than the news would suggest with the S&P 500 advancing approximately 20% since late December.

 

CURRENCY FUTURES

The U.S. dollar firmed as investors search for higher yields, as foreign major central banks have turned more cautious about increasing interest rates.

The European Central Bank will hold its regularly scheduled policy meeting on Thursday. It is anticipated that ECB President Mario Draghi will deliver dovish commentary.

The British pound is lower in spite of data that showed the U.K. service sector expanded more than expected in February. The U.K. services PMI rose to 51.3 in February when economists had forecast 50.0.

 

INTEREST RATE MARKET FUTURES

Futures are lower even though Boston Federal Reserve President Eric Rosengren said he supported a “patient” policy approach that could last for “several” meetings of the Fed’s Federal Open Market Committee.

Financial futures markets are predicting a 90% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 6% chance for a 25 basis point increase and there is a 4% probability of a decline in 2019.

The thirty year Treasury bond futures are testing the bottom of a broad trading range that started in the first week in January.

A U.S.-China trade agreement, or strong hint of one, would be a catalyst to take futures lower.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2781.00      Resistance    2804.00

 

March 19 U.S. Dollar Index

Support    96.470        Resistance    96.770

 

March 19 Euro Currency

Support    1.13230      Resistance    1.13620

 

March 19 Japanese Yen

Support    .89290        Resistance    .89630

             

March 19 Canadian Dollar

Support    .74850        Resistance    .75220

 

March 19 Australian Dollar

Support    .7071          Resistance    .7107

 

June 19 Thirty Year Treasury Bonds

Support    143^18       Resistance    144^16

 

April 19 Gold

Support    1283.0        Resistance    1296.0

 

May 19 Copper

Support    2.9050        Resistance    2.9600

 

April 19 Crude Oil

Support    55.93          Resistance    57.55


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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