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Stock Index Futures Likely to at Least Partially Recover this Afternoon

by Archer Financial Services | May 06, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

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.

 

CURRENCY FUTURES

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.

 

INTEREST RATE MARKET FUTURES

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.

 

SUPPORT AND RESISTANCE

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 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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