Written Commentary
STOCK INDEX FUTURES
Stock index futures are mixed and are not responding to the bullish interest rate implications of this morning’s mostly weaker than expected employment reports.
Employers In the U.S. announced 75,891 job cuts in August, which is the most in five months, according to Challenger, Gray & Christmas, Inc. This is up 193% from the job reductions announced in July.
The August ADP employment report showed an increase of only 99,000 when up 140,000 were expected.
Jobless claims in the week ended August 31 were 227,000 when 230,000 were anticipated.
Nonfarm productivity at an annualized rate for the second quarter increased 2.5% when up 2.4% was expected, and unit labor costs at an annualized rate increased 0.4%, which compares to the estimate of up 0.8%.
The 8:45 central time August PMI composite is forecast to be 54.1.
The 9:00 August Institute for Supply Management services index is estimated to be 51.1.
Seasonally, September has been a weak month for stock index futures.
CURRENCY FUTURES
The U.S. dollar index declined Wednesday after the U.S. July trade deficit widened by the most in two years. In addition, lower Treasury yields weighed on the U.S. dollar.
Retail sales in the euro area edged higher by 0.1% in July from the previous month, which is in line with the consensus view.
A recent poll showed a majority of economists predict the European Central Bank will lower its key interest rate by 25 basis points at its September 12 policy meeting and also at its December meeting.
Australia’s trade surplus on goods increased in July, surpassing market expectations, and was the largest trade surplus since February.
Yesterday the Bank of Canada cut its main interest rate for a third consecutive time by 25 basis points to 4.25%. The central bank said it is worried about the economy being too weak.
INTEREST RATE MARKET FUTURES
Prospects of a 50 basis point reduction in the fed funds rate at the upcoming Federal Open Market Committee meeting have substantially increased from where they were just a few days ago.
Currently there is a 55% probability that the Federal Open Market Committee will lower its funds rate by 25 basis points at its September 18 meeting, and there is a 45% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2024 ADM Investor Services International Limited.
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 ADM. 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.
