By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures quickly fell when President Donald Trump threatened to ramp-up U.S. tariffs on $200 billion in Chinese imports to 25%, which is up from 10% currently. This puts an accord between the two countries in question ahead of a new round of talks set to begin this week in Washington.
A Chinese delegation is still planning to travel to the U.S. for trade discussions, according to China's Foreign Ministry.
Although U.S. stock indexes are lower, with the S&P 500 down 1.35%, Chinese equity markets are faring much worse with the Shanghai Composite Index down almost 5.6%.
I expect U.S. stock index futures will at least partially recover this afternoon.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks are coming and will be the dominant fundamental that supports stock index futures in the long term.
The U.S. dollar was supported by flight to quality buying. In addition, interest rate differential expectations remain bullish for the greenback, which is likely to continue to underpin the U.S. dollar.
The euro currency is lower in spite of news that the euro zone April composite PMI was 51.5 when 51.3 was forecast.
The Japanese yen is higher, as safe haven flows came into the yen.
The Canadian dollar and the Australian dollar are lower due to weaker crude oil prices.
China’s yuan tumbled to a 16-week low as trade tensions escalate.
Futures are higher across the board due to safe haven buying.
I expect some of these gains will be given back this afternoon, if I am correct that there will be at least a partial recovery this afternoon in stock index futures.
Financial futures are predicting there is a 57% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points, or more at its December 11 policy meeting. The probability was 49% on Friday.
June 19 S&P 500
Support 2881.00 Resistance 2921.00
June 19 U.S. Dollar Index
Support 97.180 Resistance 97.550
June 19 Euro Currency
Support 1.12090 Resistance 1.1249
June 19 Japanese Yen
Support .90370 Resistance .91000
June 19 Canadian Dollar
Support .74100 Resistance .74550
June 19 Australian Dollar
Support .6962 Resistance .7015
June 19 Thirty Year Treasury Bonds
Support 147^16 Resistance 148^26
June 19 Gold
Support 1274.0 Resistance 1288.0
July 19 Copper
Support 2.7400 Resistance 2.8200
June 19 Crude Oil
Support 59.97 Resistance 62.03
For more information about these markets, please contact Alan at 312.242.7911 or via email at firstname.lastname@example.org. 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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