All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

US stock index futures steady in early trade

Last updated 6/22/2012 4:31 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

David Morrison

Market Strategist, GFT

Follow @DMorrison_GFT

So far this morning, US stock index futures have managed to steady following yesterday's sharp sell-off. The question now is whether stocks can find a foothold or fall further ahead of the weekend? Investors have had to contend with a full skip-load of bad news this week. Economic data from the US, Europe and China has worsened; the debt crisis across  Europe continues to deteriorate, and the US Federal Reserve held back from expanding its balance sheet through further asset purchases. On top of this, markets were spooked by stories that Moody's was set to downgrade a number of major investment banks. Indeed, after the US close, Moody's downgraded 15 international financial institutions, including JP Morgan, Goldman Sachs, Barclays, HSBC, Citigroup, Bank of America and Morgan Stanley. However, there is some relief this morning that the ratings cuts weren't deeper in a number of cases. Investors are still mulling over Wednesday's FOMC decision. The FOMC extended "Operation Twist" to the year-end but refrained from more aggressive stimulus measures. It also downgraded its outlook for US growth and employment. Concerns are growing that the Fed is keeping its powder dry so that it is ready to act if/when the European debt crisis escalates. The trouble with this is, that the closer we get to the US Presidential Election in November, the more political any intervention from the Fed appears. Any action by Ben Bernanke could be spun as helping the current Administration. In addition, many Americans will be extremely unhappy if their central bank loosens monetary policy further in order to aid Europe. After all, quantitative easing is already extremely controversial, with many insisting that the extra cheap funding has simply bailed out irresponsible bankers rather than helping small businesses and ordinary people. Many in Congress have already expressed their disgust that previous Fed actions (including last year's coordinated dollar swap) have been undertaken to help out Europe - which is big enough and rich enough to sort out its own problems without American taxpayers' money.There is no significant economic data due out today, but there is an important EU ECOFIN meeting today. In addition, leaders of the "Big Four" - Germany, France, Italy  and Spain - meet, and it looks as if German Chancellor Merkel will come under more pressure than ever to ease up on her apparently uncompromising attitude to "austerity" - or, put another way, her insistence that countries who receive bailout loans engage in fiscal restraint in return.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Futures & Forex, Ltd. (“GFT Markets”) and FX360.com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of GFT Markets, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. GFT Markets and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

Loading...

About The Author

David Morrison has worked in financial markets for over 25 years. He joined GFT in February 2009 to deliver commentary and research for derivatives products. Before then David had been instrumental in setting up two spread betting companies, managed trading desks, and implemented and ran successful risk-management strategies.

He has appeared on Bloomberg, Reuters, and Sky TV, and is widely quoted by financial newswires. He has written numerous articles covering economics and trading strategies using fundamental and technical analysis.