rounded corner
rounded corner
top border

U.S.-China Trade Optimism


Bookmark and Share

January 14, 2020

STOCK INDEX FUTURES

Stock index futures are mixed, as investors focus on the U.S.-China trade deal. However, in the overnight trade the S&P 500 and NASDAQ futures advanced to new record highs, as geopolitical tensions remained in check and traders looked ahead to the beginning of earnings season.

The Chinese trade delegation arrived in Washington, DC to sign the phase-one trade deal. The U.S. and China have both said that they plan to sign a phase-one trade agreement on Wednesday.

Traders will be watching closely, as U.S. companies report their latest quarterly earnings reports over the next several weeks. Fourth quarter earnings for companies in the S&P 500 are expected to decline 2.1% from a year earlier, but analysts expect earnings growth will improve in 2020.

The National Federation of Independent Business small business economic trends survey was 102.7 when 104.4 was expected.

The U.S. consumer price index increased a seasonally adjusted 0.2% in December from a month earlier, when up 0.3% was anticipated. The core prices, which exclude the often volatile food and energy categories, increased 0.1%, which compares to the estimated 0.2% gain.

I anticipate stock index futures will continue to advance in January.

CURRENCY FUTURES

The euro currency is lower in spite of news that euro zone lending to households increased at a faster pace in the third quarter, according to the European Central Bank. The annual growth rate of loans to households improved to 3.5% from 3.4% in the second quarter.

The British pound continues to come under pressure, as it is becoming more likely that the Bank of England will lower its key lending rate this year.

The probability of a 25 basis point rate cut from the Bank of England on January 30 is approximately 50% and the market has fully priced in a 25 basis point rate reduction by September 2020.

Yesterday, a Bank of England policy maker indicated that he would likely support an interest rate cut later this month, if there are no signs that the economy is improving.

The Japanese yen, which is often considered a flight to quality currency, is lower due to an optimistic tone to the U.S.-China trade situation.

The Canadian dollar and the Australian dollar are lower in spite of higher crude oil prices.

INTEREST RATE MARKET FUTURES

Futures are higher in light of the weaker than estimated U.S. consumer price index.

Esther George of the Federal Reserve will speak at 12:00 central time.

There is a 56% probability that the Federal Open Market Committee will lower its fed funds rate at its December 16, 2020 policy meeting. Yesterday the probability was 56%.

Interest rate market futures are likely to trade broadly sideways in the longer term, although the flight to quality influence will likely reemerge from time to time.

SUPPORT AND RESISTANCE

March 20S&P 500

Support 3273.00 Resistance 3298.00

March 20 U.S. Dollar Index

Support 97.030 Resistance 97.330

March 20Euro Currency

Support 1.11420 Resistance 1.11880

March 20Japanese Yen

Support .91000 Resistance .91370

March 20Canadian Dollar

Support .76410 Resistance .76700

March 20Australian Dollar

Support .6888 Resistance .6925

March 20 Thirty Year Treasury Bonds

Support 156^28 Resistance 157^26

February 20Gold

Support 1534.0 Resistance 1555.0

February 20 Crude Oil

Support 57.63 Resistance 59.03

March 20Copper

Support 2.850 Resistance 2.8850

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.


Would you like to open an account with us? Go to our interactive New Account application at Open An Account. It is fast, saves on postage and its green.


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 information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. 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.



Recent articles from this author



About the author


Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at alan.bush@admis.com.

Published by Barchart
Home  •  Charts & Quotes  •  Commentary  •  Authors  •  Education  •  Broker Search  •  Trading Tools  •  Help  •  Contact  •  Advertise With Us  •  Commodities
Markets: Currencies  •   Energies  •   Financials  •   Grains  •   Indices  •   Meats  •   Metals  •   Softs

The information contained on InsideFutures.com is believed to be accurate but is not guaranteed. Market data is furnished on an exchange delayed basis by Barchart.com. Data transmission or omissions shall not be made the basis for any claim, demand or cause for action. No information on the site, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any futures or options contracts. InsideFutures.com is not a broker, nor does it have an affiliation with any broker.


Copyright ©2005-2020 InsideFutures.com, a Barchart.com product. All rights reserved.

About Us  •   Sitemap  •   Terms of Use  •   Privacy Policy