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Stock Index Futures Over Performing the News

by Archer Financial Services | May 05, 2020

By Alan Bush | Senior Financial Economist at ADMIS   

 
STOCK INDEX FUTURES

Stock index futures are higher despite renewed U.S.-China tensions. 

Crude oil prices advanced for five consecutive days which is supportive to stock index futures.

The 8:45 central time April PMI services index is expected to be 27 and the 9:00 April Institute for Supply Management nonmanufacturing index is anticipated to be 37.9.

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

In recent weeks stock index futures have overperformed the news.

CURRENCY FUTURES

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

The euro currency is lower following a court ruling in Germany that raised questions around the European Central Bank's main bond buying program. They ruled that some actions taken by the country’s Bundesbank to participate in the asset purchase program were unconstitutional. 

The March producer price index in the euro zone fell 1.5% on the month and 2.8% on year. The median estimate called for the March producer price index to be down 1.3% on the month and down 2.6% on the year. 


The Australian dollar is steady after the Reserve Bank of Australia left its official cash rate unchanged at 0.25% and reaffirmed its commitment to maintain the 3-year government bond yield at 0.25%. 

RBA Governor Philip Lowe said, "The Board is committed to do what it can to support jobs, incomes and businesses during this difficult period and to make sure that Australia is well placed for the expected recovery." 

The central bank of Australia predicted the country's gross domestic product growth will fall by approximately 10% over the first half of 2020 and by around 6% over the year as a whole.   This is likely to be followed by a bounce back of 6% growth in gross domestic product next year. 

INTEREST RATE MARKET FUTURES 

Flight to quality longs are being liquidated in light of higher stock index futures. 

The U.S. Treasury Department reported that it expects to borrow $3 trillion in the second quarter to pay for the aid packages passed by Congress last month. Also, the U.S. Treasury expects to borrow an additional $677 million in the third quarter.

Federal Reserve speakers today are Charles Evans at 9:00, James Bullard at 1:00 and Raphael Bostic at 1:00.

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    2820.00    Resistance    2885.00 

June 20 U.S. Dollar Index
Support   99.320        Resistance    100.120

June 20 Euro Currency
Support    1.08300     Resistance    1.09420 

June 20 Japanese Yen
Support    .93550        Resistance    .93980

June 20 Canadian Dollar
Support    .70880        Resistance    .71400 

June 20 Australian Dollar
Support    .6414           Resistance    .6472

June 20 Thirty Year Treasury Bonds
Support    179^16       Resistance     180^30

June 20 Gold
Support    1693.0         Resistance    1722.0 

July 20 Copper
Support    2.3100         Resistance    2.3400 

July 20 Crude Oil
Support    25.20            Resistance    25.88

 



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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