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U.S.-China Trade Talks Apparently Delayed - Stock Index Futures Performing Well

by Archer Financial Services | Mar 18, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Global equity markets advanced to the highest level in five months, and last week the S&P 500 and NASDAQ posted the strongest weekly gains this year.  

Stock index futures are holding up well today in spite of reports over the weekend saying a meeting between President Donald Trump and Chinese leader Xi Jinping was unlikely to happen until June. A meeting had previously been expected this for late this month and then in April.

The 9:00 central time March housing market index is expected to be 63.

Since the lows were made in late December, stock index futures have been performing better than the news would suggest, which should be viewed as a sign of long term strength.

  

CURRENCY FUTURES

The U.S. dollar is lower today following its worst week since early December. 

Pressure on the greenback is linked to the belief that the Federal Open Market Committee may be moving toward accommodation this year.

The euro currency is higher in spite of news that the euro zone's merchandise trade surplus for January decreased sharply from a year ago.

The British pound is lower as investors closely watch the Brexit situation. U.K. Prime Minister May is expected to bring her already twice rejected proposal for an agreement dictating the U.K.’s relationship with the E.U. for a third vote this week. U.K. policymakers last week rejected the prospect of exiting without an agreement and called for an extension of the country’s Brexit deadline from March 29.

The Japanese yen is lower in spite of news that Japan's industrial production in January declined less than estimated earlier. Industrial production fell a 3.4% month-to-month in January, following a 3.7% decline estimated earlier.

The Canadian dollar and the Australian dollar are higher due to firming prices for crude oil.

The Australian dollar hit a three week high due to increasing prices for industrial commodities and on expectations for an accommodative Federal Reserve meeting this week.

 

INTEREST RATE MARKET FUTURES

The Federal Open Market Committee will conclude a two day meeting on Wednesday with investors focused on the policy statement and remarks by Fed Chairman Jerome Powell. Investors expect the Fed to maintain the dovish tone it struck at its January meeting when it put its rate increasing plan on hold and became “data dependent.”

Financial futures markets are predicting there is a 72% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 28% chance for a 25 basis point decline in 2019 and virtually no chance of a rate increase.

Futures are lower in spite of the belief that the Federal Open Market Committee will signal a dovish policy stance this week, which is a sign of at least short term weakness.

Over the near term futures are caught between the bullish influence of a weakening global economy and overseas central bank accommodation and the bearish influence of optimism for a U.S.-China trade agreement.

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

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2821.00      Resistance    2839.00

 

June 19 U.S. Dollar Index

Support    95.740        Resistance    96.110

 

June 19 Euro Currency

Support    1.14020      Resistance    1.14580

  

June 19 Japanese Yen

Support    .90150        Resistance    .90440

 

June 19 Canadian Dollar

Support    .75030        Resistance    .75460

 

June 19 Australian Dollar

Support    .7081          Resistance    .7126

 

June 19 Thirty Year Treasury Bonds

Support    145^16       Resistance     146^12

 

April 19 Gold

Support    1296.0        Resistance    1311.0

 

May 19 Copper

Support    2.8950        Resistance    2.9400

 

May 19 Crude Oil

Support    58.21          Resistance    59.43


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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