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Reports of a Slowdown in the Number of New Coronavirus Cases in China

by Archer Financial Services | Feb 11, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures are higher due to reports that there is a slowdown in the number of new coronavirus cases in China. S&P 500 and NASDAQ futures reached record highs.

The National Federation of Independent Business small business optimism index was 104.3 when 103.2 was expected.

The 9:00 central time December Job Openings and Labor Turnover Survey (JOLTS) is anticipated to show 6.775 million.

Federal Reserve Chairman Jerome Powell will testify in front of the House Financial Services Committee at 9:00, as part of the semi-annual monetary policy testimony where he could deliver clues on the direction of interest rates and his outlook for the economy.

My outlook remains unchanged in that stock index futures will end up higher in the first quarter.

CURRENCY FUTURES   

The U.S. dollar advanced to a new four month high. Recent strength in the greenback is linked to the belief that the Federal Reserve will be less aggressive in adding more accommodation to the banking system than other major central banks.

The British pound is higher, as data showed the nation's economy grew more than expected on the year in the fourth quarter.

The Office for National Statistics said U.K. gross domestic product increased 1.1% year-on-year, which is up from expectations of 0.8% growth. Monthly gross domestic product rose 0.3%, which offset the 0.3% decline in November.

The Canadian dollar and the Australian dollar are higher, as a result of firming crude oil prices.

INTEREST RATE MARKET FUTURES

Flight to quality longs are being liquidated due to easing coronavirus concerns.

In addition to Fed Chair Powell, other Federal Reserve speakers today are Randal Quarles at 11:15, James Bullard at 12:30 and Neel Kashkari at 1:15.

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

Based on financial futures markets, currently there is a 68% probability that the Federal Open Market Committee will lower its fed funds rate at its September 16, 2020 policy meeting.  Yesterday the probability was 71%.

SUPPORT AND RESISTANCE

March 20 S&P 500

Support    3347.00      Resistance    3373.00

March 20 U.S. Dollar Index

Support    98.630        Resistance    98.920

March 20 Euro Currency

Support    1.09080      Resistance    1.09480

March 20 Japanese Yen

Support    .91050        Resistance    .91350

March 20 Canadian Dollar

Support    .75050        Resistance    .75330

March 20 Australian Dollar

Support    .6680          Resistance    .6734

March 20 Thirty Year Treasury Bonds

Support    162^4         Resistance     162^28

April 20 Gold

Support    1569.0        Resistance     1584.0

March 20 Crude Oil

Support    49.50          Resistance     50.98

March 20 Copper

Support    2.5550        Resistance     2.5950



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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