Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
S&P 500, Dow and NASDAQ futures are lower today after advancing to record highs last week. Last week’s strength was linked to a strong start to earnings season from banks and other financial companies.
Stock index futures are performing well for the news.
I expect futures to recover from the lower morning prices and trade higher.
CURRENCY FUTURES
The U.S. dollar index extended losses and is trading at the lowest level since March 5, as Treasury yields remain below the recent highs reached last month and the Federal Reserve maintains its dovish policy stance.
The euro currency is higher despite news that construction output in the euro area contracted 5.8% year-on-year in February of 2021, following an upwardly revised 2.6% drop in January. This was the sixth consecutive month of declining construction output and the most since May 2020.
The Japanese yen gained against the U.S. dollar and is trading at a 7-week high on news that Japan’s exports jumped 16.1% year-on-year to a near a three-year high in March, while imports increased by 5.7% year-on-year to a 14-month high over the same period.
The yen is higher in spite of a report that showed Japan’s industrial output fell 1.2% month-on month in February.
The Canadian dollar is higher on news that housing starts in Canada surged 21.6% over a month earlier to 335,200 units in March of 2021, which compares to market forecasts of 250,000 units.
The Australian dollar is higher on news that new home sales in Australia soared 90.3% month-on-month in March, while unemployment data came in at a 12-month low of 5.6% last week.
INTEREST RATE MARKET FUTURES
Recent declines in yields can be partially attributed to overseas money managers, especially in Japan, making large purchases of U.S. government debt.
There are no major Federal Reserve speakers scheduled for today.
In my minority view, I am seeing indications that global economic growth may not be as strong as many analysts are predicting.
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.
