Earnings Season Kicking Into Higher Gear
STOCK INDEX FUTURES
Stock index futures are higher, as investors look ahead to earnings season kicking into higher gear. More than a third of S&P 500 companies will report earnings this week.
Also, traders are awaiting the Federal Reserve’s policy meeting later this week.
The June Chicago Federal Reserve national activity index was negative 0.19 when 0.05 was expected.
The 9:30 central time July Dallas Federal Reserve manufacturing index is anticipated to be negative 12.0.
Futures are being supported by the belief that the Federal Open Market Committee is becoming less hawkish.
In addition, the technical aspects are becoming more friendly.
The euro currency is higher despite news that business confidence in Germany worsened sharply in July. The Ifo business-climate index declined to 88.6 points in July from a revised figure of 92.2 in June, data from the Ifo Institute showed Monday. This is the lowest level since June 2020. Economists expected the index to come in at 90.5.
The index of the current situation declined to 97.7 in July from 99.4 in June, while the gauge assessing companies’ expectations fell to 80.3 from 85.5.
The Ifo index is based on a poll of approximately 9,000 companies in manufacturing, services, trade and construction.
Longer term, lower prices are likely for the euro currency.
The British pound advanced on news that the Confederation of British Industry’s quarterly gauge of manufacturing optimism in the U.K. increased to -21.0 in the third quarter of 2022 from -34.0 in the previous three-month period but remained in negative territory for the third consecutive quarter.
INTEREST RATE MARKET FUTURES
Futures are lower today in response to higher stock index futures.
Last week the 30-year Treasury bond futures broke out above a two-week symmetrical triangle pattern.
The Treasury will auction two-year notes today.
According to financial futures markets, there is a 77.5% probability that the Federal Open Market Committee will hike its fed funds rate by 75 basis points and a 22.5% probability that the rate will increase by 100 basis points at the July 27 meeting.
Higher prices are likely for the interest rate market futures on the growing belief that the Federal Open Market Committee is becoming less hawkish.
In addition, there is speculation that the Federal Open Market Committee will return to accommodation next year.
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.
© 2021 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.