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Increased Coronavirus Concerns

by Archer Financial Services | Feb 13, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

 

STOCK INDEX FUTURES

Stock index fell, as the number of coronavirus cases takes a surprise jump in China.

The U.S. consumer price index increased 0.1% last month, when a gain of 0.2% was expected and the consumer price index, excluding the often volatile food and energy categories, was up 0.2% as anticipated.

The number of Americans applying for first-time unemployment benefits advanced slightly last week, but remained at historically low levels. Initial jobless claims increased 2,000 in the week ended February 8 to 205,000. Economists expected 210,000 new jobless claims. 

In spite of lower prices today, my outlook remains unchanged in that stock index futures will end up higher in the first quarter.

CURRENCY FUTURES   

The U.S. dollar is lower today.  However, recent gains to four month highs was 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. In the longer term, higher prices are likely for the U.S. dollar, which remains my minority opinion.

The euro currency is lower after a report showed German consumer prices fell in January, which was in line with forecasts. The consumer price index decreased 0.6% compared with December and increased 1.7% compared with the same month a year ago.

Flight to quality buying is coming into the Japanese yen.

INTEREST RATE MARKET FUTURES

Flight to quality longs are being reestablished due to the increase in coronavirus concerns.

Federal Reserve speakers today are Robert Kaplan at 11:45 and John Williams at 4:30.

The Treasury will auction 30 year bonds today.

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 69% probability that the Federal Open Market Committee will lower its fed funds rate at its September 16, 2020 policy meeting.  Yesterday the probability was 66%.

SUPPORT AND RESISTANCE

March 20 S&P 500

Support    3346.00      Resistance    3383.00

March 20 U.S. Dollar Index

Support    98.700        Resistance    98.950

March 20 Euro Currency

Support    1.08600      Resistance    1.09120

March 20 Japanese Yen

Support    .90790        Resistance    .91400

March 20 Canadian Dollar

Support    .75280        Resistance    .75550

March 20 Australian Dollar

Support    .6704          Resistance    .6748

March 20 Thirty Year Treasury Bonds

Support    161^16       Resistance     162^30

April 20 Gold

Support    1568.0        Resistance     1584.0

March 20 Crude Oil

Support    50.45          Resistance     51.98

March 20 Copper

Support    2.5800        Resistance     2.6250



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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