By Alan Bush | Senior Financial Economist at ADMIS
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.
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.
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%.
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
Would you like to open an account with us? Go to our interactive New Account application at Open an Account. It is fast, saves on postage and it’s green.
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.
Contact Us Today
Get free guides and special offers in the Resource Center.
© 2018 Archer Financial Services, Inc.
This is not a solicitation of any order to buy or sell, but merely a collection of information related to Archer Financial services and commodities trading provided by Archer Financial services. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such element, nor with respect to any expression of opinion herein contained.
The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.