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Stock Index Futures Holding Up Well in Spite of a Less Optimistic U.S.-China Trade Outlook

by Archer Financial Services | Jul 17, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are holding up well in spite of yesterday’s comments from President Donald Trump when he suggested talks between Washington and Beijing have stalled and warned that he could apply new tariffs on $325 billion worth of China made goods in the coming months.

Housing starts fell 0.9% in June from the prior month to1.253 million when 1.260 were expected. Residential building permits, which can signal how much construction is in the pipeline, declined 6.1% from May to an annual rate of 1.220 million, which was the biggest monthly drop since March 2016. Analysts anticipated permits would total 1.300 million.

At 1:00 central time the Federal Reserve will release its “Beige Book” on the economy. This book, which is a snapshot of business conditions around the country, is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee.

My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.

CURRENCY FUTURES

The British pound fell to its lowest level against the U.S. dollar since June of 2017 due to Brexit uncertainties and increasing prospects of easier credit policies from the Bank of England.  

Canada's consumer price index increased 2.0% on a year-over-year basis in June, which compared with a 2.4% gain in the previous month. Market expectations were for a 1.9% rise in June. 

Canada's factory sector rebounded as expected in May. Manufacturing sales increased 1.6% in May from the previous month, which matched market expectations.

INTEREST RATE MARKET FUTURES

Futures are mostly higher with most of the gains in the 30 year Treasury bond futures. Some of the buying can be attributed to a less optimistic outlook for a U.S.-China trade deal.

Kansas City Federal Reserve Bank President Esther George will deliver a speech on the economic outlook at the 2019 Agricultural Symposium in Kansas City, Missouri at 11:30.

Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its July 30-31 policy meeting. A second rate cut is anticipated by financial futures markets later this year.

In the longer term, higher prices are likely for futures, as most major central banks are likely to embark on a new round of accommodation.

SUPPORT AND RESISTANCE

September 19 S&P 500

Support    3001.00      Resistance    3017.00

September 19 U.S. Dollar Index

Support    96.880        Resistance    97.120

September 19 Euro Currency

Support    1.12450      Resistance    1.12840

September 19 Japanese Yen

Support    .92660        Resistance    .92980

September 19 Canadian Dollar

Support    .76400        Resistance    .76880

September 19 Australian Dollar

Support    .7005          Resistance    .7041

September 19 Thirty Year Treasury Bonds

Support    153^20       Resistance     154^18

August 19 Gold

Support    1400.0        Resistance     1417.0

September 19 Copper

Support    2.6800        Resistance     2.7100

August 19 Crude Oil

Support    57.30          Resistance     58.88

 



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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