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Stock Index Futures Recover

by Archer Financial Services | Mar 13, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

 

STOCK INDEX FUTURES

U.S. stock index futures were limit up in the overnight trade. The main reason appears to be reports that the Trump administration and Congress are close to agreeing to an economic support package in an effort to mitigate the negative impact of the coronavirus.

In addition, there are hopes of more central bank stimulus and government spending.

Also, President Donald Trump said coronavirus testing will soon happen on a very large scale basis.

Yesterday, China’s National Health Commission said China has passed the peak of the coronavirus epidemic.

U.S. import prices were down 0.5% in February from January when economists expected a 0.8% decline.

The 9:00 central time March consumer sentiment index is expected to be 98.

While traders focus on the negative bearish influence of the coronavirus, and rightly so, it will be the bullish impact of substantially easier credit from the world’s central banks that will dominate in the long term.
 

CURRENCY FUTURES

The U.S. dollar is higher, as it appears that the U.S. economy will recover earlier than elsewhere in the world. 

In February, German consumer prices increased 0.4% compared with January, which was in line with forecasts.

 

Yesterday, the Bank of England cut its benchmark interest rate by 50 basis points to 25 basis points from 75 basis points. The BOE last cut its key interest rate in August 2016. 
 

INTEREST RATE MARKET FUTURES

In light of the strong gains for stock index futures, flight to quality longs were liquidated today.

A week ago the yield curve was severely inverted at the short end. However, today the short end has flattened to some degree and the longer term part of the yield curve became more normal. This suggests there will be an economic recovery in the U.S. starting in the fall and into next year.

Based on financial futures markets, there is virtually a 25% probability of a 75 basis point cut in the fed funds rate to 25 to 50 basis points and a 75% probability of a 100 basis point cut to zero to 25 basis points at the March 18 Federal Open Market Committee meeting.

SUPPORT AND RESISTANCE

March 20 S&P 500

Support    2392.00      Resistance    2638.00

June 20 U.S. Dollar Index

Support    97.350        Resistance    98.270

June 20 Euro Currency

Support    1.11420      Resistance    1.12700

June 20 Japanese Yen

Support    .93380        Resistance    .96110

June 20 Canadian Dollar

Support    .71630        Resistance    .72680

June 20 Australian Dollar

Support    .6252          Resistance    .6328

June 20 Thirty Year Treasury Bonds

Support    172^2        Resistance     180^26

April 20 Gold

Support    1550.0       Resistance     1600.0

April 20 Crude Oil

Support    30.15          Resistance     33.98

May 20 Copper

Support    2.4000        Resistance     2.5350



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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