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Stock Index Futures Likely to Recover from Early Pressure

by Archer Financial Services | Mar 22, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures fell due to a series of weak economic reports in the euro zone.  Euro zone purchasing managers indexes came in below expectations, dragged down by weak performances in Germany and France.

The 8:45 central time U.S. March PMI Composite FLASH is expected to be 55.2.

The 9:00 February existing home sales report is anticipated to show 5.1 million and the 9:00 January wholesale trade report is estimated to be up .1%.

I expect at least a partial recovery for stock index futures from the current lower levels.

Stock index futures have moved higher since late last year in spite the reduced rate of global economic expansion.

I believe investors are correctly anticipating easier credit conditions from the world’s central banks are and will continue to be the dominant fundamental that supports stock index futures.

 

CURRENCY FUTURES

The U.S. dollar advanced and the euro currency fell following a round of disappointing economic data in the euro zone.

The euro zone manufacturing preliminary purchasing managers index fell to 51.3 in March from 51.9 in February, which was a worse drop than expected. In Germany, the euro zone’s largest economy, the manufacturing PMI for March was 44.7, which was weaker than expected.     

The British pound advanced on news that late Thursday, European Union leaders allowed U.K. Prime Minister Theresa May to postpone the Brexit deadline beyond next week.

The Canadian dollar is lower on news that Canadian retail sales fell for a third consecutive month in January. Statistics Canada said retail sales decreased 0.3% in January from the previous month. Market expectations were for a 0.4% increase. 

However, inflation in Canada rose in February at a slightly faster than expected rate.   Canada's consumer price index climbed 1.5% on a year over year basis in February, which is up from a 1.4% gain in the previous month. Market expectations were for a 1.4% increase in February.

 

INTEREST RATE MARKET FUTURES

Global bond markets rallied, sending yields lower, as a result of a series of weaker than expected euro zone data prompted investors to move into the perceived safety of government paper.

The yield for the 10 year German government bond fell 4.7 basis points to negative 0.01%, which is its lowest in almost two and a half years. In addition, the 10 year Japanese government bond yield also fell to negative 0.07%, which is its lowest level since November 2016.

Federal Reserve speakers today are Atlanta Federal Reserve Bank President Raphael Bostic at 8:30 and Chicago Federal Reserve Bank President Charles Evans at 8:45.

Financial futures markets are predicting there is a 54% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 46% chance for a 25 basis point or more decline in the fed funds rate in 2019.

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2837.00      Resistance    2868.00

 

June 19 U.S. Dollar Index

Support    95.620        Resistance    96.350

 

June 19 Euro Currency

Support    1.13570      Resistance    1.14810

 

June 19 Japanese Yen

Support    .90710        Resistance    .91360

 

June 19 Canadian Dollar

Support    .74520        Resistance    .75150

 

June 19 Australian Dollar

Support    .7091          Resistance    .7139

 

June 19 Thirty Year Treasury Bonds

Support    147^0         Resistance     148^12

 

April 19 Gold

Support    1304.0        Resistance    1318.0

 

May 19 Copper

Support    2.8600        Resistance    2.9250

 

May 19 Crude Oil

Support    58.91          Resistance    60.55


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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