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U.S. Stock Index Futures Higher for a Second Day

by Archer Financial Services | Feb 04, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

 

STOCK INDEX FUTURES

U.S. stock index futures are sharply higher due to speculation that global economic growth will be resilient, as fiscal and accommodative monetary policies reduce the negative impact of the coronavirus outbreak.

There is support from recent data that is showing global manufacturing appears to be steadying, along with the Chinese central bank's moves to inject large amounts of liquidity into its banking system this week.

The 9:00 central time U.S. December factory orders report is expected to show an increase of 1.3%.

In spite of the negative market impact of the coronavirus, I anticipate U.S. stock index futures prices will end up higher in the first quarter.

CURRENCY FUTURES   

The U.S. dollar is higher against most currencies on the belief that the Federal Reserve will be less aggressive in adding more accommodation to the banking system than other major central banks.

In addition, the greenback is being supported by a report yesterday that showed an unexpected rebound in U.S. manufacturing.

The euro zone December producer price index was unchanged, as expected.

The British pound advanced after a report showed U.K. construction output in January fell at the slowest pace since May 2019.

The Japanese yen fell, as flight to quality longs were liquidated. Asian equity markets advanced and investors welcomed China's stimulus plans to support its economy.

The Reserve Bank of Australia left its benchmark interest rate unchanged at its policy meeting today. The official cash rate remained at a record low 75 basis points.
 

INTEREST RATE MARKET FUTURES

Futures are lower, as flight to quality longs are liquidated, following a second day of advancing stock index futures.

In light of the negative impact of the coronavirus on global economic growth, major central banks will come under pressure to add more accommodation.

However, the perceived need for more accommodation has receded since yesterday.

Based on financial futures markets, currently there is a 45% probability that the Federal Open Market Committee will lower its fed funds rate at its June 10, 2020 policy meeting.  Yesterday the probability was 58%.

SUPPORT AND RESISTANCE

March 20 S&P 500

Support    3233.00      Resistance    3296.00

March 20 U.S. Dollar Index

Support    97.570        Resistance    97.920

March 20 Euro Currency

Support    1.10660      Resistance    1.11000

March 20 Japanese Yen

Support    .91670        Resistance    .92400

March 20 Canadian Dollar

Support    .75100        Resistance    .75440

March 20 Australian Dollar

Support    .6678          Resistance    .6745

March 20 Thirty Year Treasury Bonds

Support    162^0         Resistance     164^0

April 20 Gold

Support    1560.0        Resistance     1586.0

March 20 Crude Oil

Support    49.60          Resistance     52.00

March 20 Copper

Support    2.5000        Resistance     2.5750



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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