FOMC Statement Support Stock Indexes
STOCK INDEX FUTURES
U.S. equity futures are sharply higher with the S&P 500 reaching a new record high.
The indexes were supported by the dovish on balance Federal Open Market Committee statement yesterday and by prospects of as much as $1.8 trillion in new government spending that could spur economic growth.
The first quarter gross domestic product increased 6.4% when a gain of 6.5% was anticipated.
Jobless claims in the week ended April 24 were 553,000 when 558,000 were expected.
The 9:00 central time March pending home sales index is predicted to be up 3.8%.
Stock index futures continue to perform well for the news.
The U.S. dollar index fell to a nine-week low as a dovish outlook from the Federal Reserve and proposed new spending plans gave the green light for the global reflation trade but risked expanding the U.S. budget and trade deficits.
The euro currency is higher after a report showed German consumer prices increased in April beating expectations, according to preliminary data released by the German statistics office.
On a year-on-year basis, consumer prices advanced 2.0% as measured by national standards when economists expected a 1.8% increase. Consumer prices rose 2.1% on the year by European Union-harmonized standards, which is above the forecast of a 1.9% increase.
The British pound is higher after a report showed U.K. car production increased 46.6% year-on-year to 115,498 units in March 2021, which is the first increase in 18 months.
INTEREST RATE MARKET FUTURES
The Federal Open Market Committee at the conclusion of its two-day policy meeting yesterday decided to keep its key interest rate near zero and said it plans to continue supporting the economic recovery, while acknowledging recent progress in growth and employment.
Mr. Powell on Wednesday said that the recent rise in inflation was largely reflecting “transitory factors,” and that the Fed will hold interest rates steady until the labor market is back to full strength and inflation has reached the central bank’s target of averaging 2.0%.
Fed officials reiterated that they want to see the economy make “substantial further progress” toward their goals before starting to reduce the pace of asset purchases.
A proposed a new $1.8 trillion plan is viewed as inflationary, which pressured futures at the long end of the curve.
Federal Reserve speakers today are Randal Quarles at 10:00 and John Williams at 1:00.
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.