By Alan Bush | Senior Financial Economist at ADMIS
STOCK INDEX FUTURES
Stock index futures declined in the overnight trade on news that China’s exports tumbled by the most in three years in February, while imports fell for the third consecutive month.
There was additional pressure when the substantially weaker than expected headline U.S. nonfarm payroll report was released. Nonfarm payrolls increased 20,000 in February, when up 175,000 was anticipated.
The selling was limited due to stronger numbers for hourly earnings and the unemployment rate. Hourly earnings increased .4% when a gain of .3% was estimated and the unemployment rate fell to 3.8%, which compared to expectations of 3.9%.
The labor force participation rate, which is the percentage of Americans working or looking for a job, held unchanged at 63.2% in February, as expected.
Housing starts increased 18.6% in January from the prior month to an annual rate of 1.230 million. Residential building permits, rose 1.4% from December to an annual pace of 1.345 million. Economists had expected a 9.5% increase for starts and a 2.7% decrease for permits.
At 9:00pm central time Federal Reserve Chairman Jerome Powell will deliver a speech on Monetary Policy Normalization and Review at the 2019 Stanford Institute for Economic Policy Research.
I expect futures to at least partly recover from the morning selling.
The U.S. dollar declined following the release of the nonfarm payrolls report.
The Canadian dollar and the Australian dollar are higher in spite of sharply lower crude oil prices, which suggests traders are focusing more on interest rate differential expectations.
Some of the strength in the Canadian dollar can be explained by news that employers in Canada added 55,900 jobs in February, which far exceeded analyst expectations, while the unemployment rate was unchanged at 5.8%.
INTEREST RATE MARKET FUTURES
Futures are underperforming the news today, which suggests a move to lower prices on the day from the current higher prices.
Financial futures markets are predicting an 80% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 20% chance for a 25 basis point decline in 2019.
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 2719.00 Resistance 2753.00
March 19 U.S. Dollar Index
Support 97.110 Resistance 97.630
March 19 Euro Currency
Support 1.11870 Resistance 1.12590
March 19 Japanese Yen
Support .89580 Resistance .90520
March 19 Canadian Dollar
Support .74250 Resistance .74770
March 19 Australian Dollar
Support .7000 Resistance .7063
June 19 Thirty Year Treasury Bonds
Support 145^10 Resistance 146^8
April 19 Gold
Support 1283.0 Resistance 1307.0
May 19 Copper
Support 2.8700 Resistance 2.9250
April 19 Crude Oil
Support 54.55 Resistance 56.77
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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The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.