Written Commentary
ADM Reports Q1 2024 Results
April 30, 2024
by Alan Bush
STOCK INDEX FUTURES
Stock index futures are sharply higher with the S&P 500 futures at its highest level since March 9.
The first U.S. quarter gross domestic product was down 4.8% when a decline of 3.7% was expected.
The 9:00 central time March pending home sales index is anticipated to be negative 10.
The Federal Open Market Committee will conclude its two-day policy meeting today. A statement will be released at 1:00 central time and Federal Reserve Chairman Jerome Powell will hold a press conference at 1:30.
Stock index futures are performing well for the news, as the technical picture brightens.
CURRENCY FUTURES
The U.S. dollar is lower for a fourth day after falling under an eight-day uptrend line on Monday.
Traders may be liquidating longs ahead of today’s FOMC statement just in case the tone of the FOMC is more accommodative.
The euro currency is higher after a report showed the annual consumer price index in Germany came in slightly higher than market expectations in April. Germany’s annual consumer price index in April was 0.8% when 0.6% was estimated.
The European Central Bank will hold its regularly scheduled policy meeting tomorrow.
The Canadian dollar and the Australian dollar are higher in response to stronger crude oil prices.
There was additional support for the Australian dollar on news that inflation increased more than predicted. Official data showed the consumer price index was up by 0.3% on the March 2020 quarter and 2.2% on the year.
The annualized gain was well above expectations of a 1.9% increase. The increase pushed prices back into the Reserve Bank of Australia’s target band for the first time since the second quarter of 2018.
In the longer-term analysis there are no major disparities in interest rate differential expectations in the currency markets with all the major central banks adding more accommodation to their banking systems in one form or another.
INTEREST RATE MARKET FUTURES
The thirty-year Treasury bond futures are higher but showed little reaction to the U.S. first quarter gross domestic product data.
With the bottom of the FOMC’s narrow target range already at zero, no change in the federal funds rate is expected at the conclusion of today’s FOMC meeting.
The FOMC will likely maintain its fed funds target range at zero to 25 basis points and Fed Chair Powell will likely deliver a dovish on balance statement.
Usually the thirty-year Treasury bond futures and stock index futures move in opposite directions. However, higher prices for both markets today suggest traders believe more accommodation is coming from the world’s major central banks, which is bullish for both stock index futures and the interest rate market futures.
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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 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.
