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U.S.-China Trade Concerns at the Forefront

by Archer Financial Services | May 17, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are lower breaking a three-day winning streak, as China takes a tougher stance on trade.

China’s Shanghai Composite Index fell 2.5%.  

Beijing's higher tariffs on U.S. products on a $60 billion target list will go into effect on June 1, which could prompt Washington to go ahead with tariffs on an additional $300 billion worth of Chinese goods.

The 9:00 central time May consumer sentiment index is expected to be 97.5 and the 9:00 April leading indicators is anticipated to be up .3%.

As the U.S. earnings season winds down, of the 457 S&P 500 companies reporting approximately 75% of them beat profit expectations, according to Reuters data.

My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks are coming and will be the dominant fundamental that supports stock index futures in the long term. But, first we need to get past the U.S.-China trade hurdle.
 

CURRENCY FUTURES

The euro currency is steady, although there are concerns about upcoming European parliamentary elections.

The British pound is down for the sixth day in a row and to a four month low after cross-party Brexit talks between the Conservatives and Labour collapsed.

The Japanese yen is higher, attracting safe-haven buying due to concerns over trade tensions and impending European elections.

The offshore Chinese yuan weakened to as low as 6.9497 against the dollar, which is its weakest level since November 30.

INTEREST RATE MARKET FUTURES

U.S. Treasury bond futures advanced and remain near a seven week high, as flight to quality buying continues to underpin the interest rate futures market.

Federal Reserve speakers today are Federal Reserve Board of Governors Vice Chairman Richard Clarida at 9:00, New York Federal Reserve Bank President John Williams at 10:15, Richard Clarida again at 12:40 and John Williams again at 1:00.

Financial futures markets are predicting there is a 77% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its December 11 policy meeting, which compares to 73% yesterday.

I will be out of the office on Monday, May 20.

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2847.00      Resistance    2885.00

June 19 U.S. Dollar Index

Support    97.530        Resistance    97.830

June 19 Euro Currency

Support    1.11780      Resistance    1.12190

June 19 Japanese Yen

Support    .91040        Resistance    .91590

June 19 Canadian Dollar

Support    .74000        Resistance    .74450

June 19 Australian Dollar

Support    .6871          Resistance    .6913

June 19 Thirty Year Treasury Bonds

Support    149^10       Resistance     150^10

June 19 Gold

Support    1280.0        Resistance     1291.0

July 19 Copper

Support    2.7200        Resistance     2.7600

July 19 Crude Oil

Support    62.88          Resistance     63.98


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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