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Global Trade Issues in Focus

by Archer Financial Services | May 04, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

 

STOCK INDEX FUTURES

Global stock markets fell on renewed U.S.-China tensions. However, U.S. equity markets are well off the lows made in the overnight session.
     
Stock index futures in Europe are playing catch-up after most European markets were closed Friday for the May 1 holiday. 

The 9:00 March factory orders report is expected to show a 9.5% decline. 

Global trade issues in recent years tended to be a temporary negative influence on stock index futures. 

CURRENCY FUTURES

The U.S. dollar is higher as global U.S. dollar shortages increase as emerging markets lose reserves.

The euro currency is lower after, according to the latest European Central Bank survey, the euro area economy will contract by 5.5% in the first quarter, which is sharply lower than last quarter’s report. In addition, the ECB said, “A large degree of normality is not likely to return before the third quarter."  

Today’s report also predicted a sharp bounce in 2021 gross domestic product to 4.3% from 1.2%.  

Many analysts expect the ECB will expand its support for the region again by increasing its bond purchases, following other central banks that have pledged to buy bonds in almost unlimited quantities. 
A spokesperson for the German Ministry of Finance said Germany is discussing coordinating possible stimulus efforts with the EU and the Group of Seven.

In the longer-term analysis there are no major disparities in interest rate differential expectations in the currency markets with all the major central banks adding more accommodation to their banking systems in one form or another.

INTEREST RATE MARKET FUTURES 

There was only limited flight to quality buy coming into the market in light of lower stock index futures. 

Futures are caught between the bullish influence of weaker global economies and the bearish influence of prospects of increased fiscal stimulus from the U.S., Europe and Asia.

The 30-year Treasury bond futures remain in a broadly based congestion pattern, as the main fundamental influences affecting the long end of the curve are offsetting. 
 

SUPPORT & RESISTANCE


June 20 S&P 500
Support    2768.00    Resistance    2820.00 

June 20 U.S. Dollar Index
Support   99.050        Resistance    99.600

June 20 Euro Currency
Support    1.09280     Resistance    1.09900 

June 20 Japanese Yen
Support    .93520        Resistance    .93880

June 20 Canadian Dollar
Support    .70580        Resistance    .71230 

June 20 Australian Dollar
Support    .6367           Resistance    .6440

June 20 Thirty Year Treasury Bonds
Support    180^20       Resistance     181^26

June 20 Gold
Support    1700.0         Resistance    1730.0 

July 20 Copper
Support    2.2800         Resistance    2.3150 

June 20 Crude Oil
Support    18.03            Resistance    20.13

 



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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