Written Commentary
Ag Market View for July 26.24
July 26, 2024
STOCK INDEX FUTURES
U.S. stock index futures are higher despite the weaker than expected housing and building permits numbers.
Housing starts in April were 1.569 million when 1.705 million were expected and building permits were 1.760 million, which compared to the anticipated 1.780 million.
Stock index futures are performing well on the news.
CURRENCY FUTURES
The U.S dollar index has underperformed recently, ignoring last week’s bullish larger than expected increases in consumer price and producer price indexes. Some of the underperformance in the greenback can be explained by Federal Reserve officials persistently downplaying inflation risks, saying they are transitory.
The dollar index retreated further to below 90.000 to the lowest since February 26.
The euro currency continues to advance despite news that the euro zone economy shrank at the beginning of 2021 for the second consecutive quarter, entering its second technical recession in a year.
Gross domestic product fell by 0.6% over the previous quarter in the first quarter in the 19 countries that use the euro as their currency, confirming its first estimate for the period. This is in line with what economists had estimated.
On a year-on-year basis, the economy shrank by 1.8%, which is also in line with the first estimate and with economists’ forecasts.
The British pound is higher on news that the unemployment rate in the U.K. edged down to 4.8% in the three months to March, which is lower than market forecasts of 4.9%
The Japanese economy shrank 1.3% on the quarter in the first quarter compared with market estimates of a 1.2% decline and after 2.8% growth in the previous period.
The Australian dollar advanced after news that Australian consumer confidence increased 0.8% last week.
INTEREST RATE MARKET FUTURES
Dallas Federal Reserve President Robert Kaplan reiterated yesterday that he does not expect interest rates to increase until next year, but argued it would be “healthy” to start discussing the timing of a stimulus taper.
Federal Reserve speakers today are Raphael Bostic at 10:00, Robert Kaplan at 10:05 and Raphael Bostic at 11:30.
In my minority view, I am seeing indications that the global economy will continue to improve, but growth may not be as strong as many analysts are predicting.
GOLD AND SILVER FUTURES
Futures are higher with gold trading at its highest level since February 2. Gold and silver futures continue to be supported by weakness in the U.S. dollar.
In addition, most major central banks will probably keep their accommodation for longer, which remains a bullish longer term influence on the precious metals.
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.
