NAS100 braced for more pain? :: InvestMacro

• NAS100 ↓ over 4% this week

• Index set to be rocked by various forces

• Big tech earnings & key US data in focus

• Watch out for geopolitical tensions

• Key level of interest at 17,000

The week ahead may present fresh trading opportunities due to top-tier data and big tech earnings:

Monday, 22nd April

• CN50: China loan prime rates
• TWN: Taiwan export orders, jobless rate
• EU50: Eurozone consumer confidence
• EUR: ECB President Christine Lagarde speech

Tuesday, 23rd April

• EU50: Eurozone S&P Global PMI’s
• GER40: Germany S&P Manufacturing PMI
• JP225: Japan Jibun Bank Manufacturing PMI
• SG20: Singapore CPI
• TWN: Taiwan industrial production
• UK100: UK S&P Global/CIPS Manufacturing PMI
• SEK: Riksbank Governor Erik Thedeen speech
• NAS100: Tesla, PepsiCo earnings

Wednesday, 24th April  

• AU200: Australia CPI
• CAD: Canada retail sales
• EUR: Germany IFO business climate
• NZD: New Zealand trade
• CAD: BoC policy meeting minutes
• US30: IBM, Boeing earnings
• NAS100: Meta Platforms earnings

Thursday, 25th April

• US500: US Q1 GDP, initial jobless claims
• EU50: Airbus earnings
• CHF: SNB issues first quarter results
• NAS100: Microsoft, Alphabet earnings

Friday, 26th April

• JPY: BoJ rate decision, Tokyo CPI, inflation & GDP forecasts
• SG20: Singapore industrial production, home prices
• USD: US March PCE report, University of Michigan consumer sentiment
• US500: Exxon Mobil earnings
• US30: Chevron earnings
• CHF: SNB President Thomas Jordan speech

FXTM’s NAS100 which tracks the underlying benchmark Nasdaq 100 index is under the spotlight after shedding over 4% this week.

A combination of geopolitical risk and concerns about higher-for-longer US rates have rocked the index, with bears back in the picture.

More volatility could be on the horizon, and here are 4 reasons why:

     1) Geopolitical Risk

On top of the list is the developments in the Middle East.

Geopolitical jitters are likely to keep markets edgy in the week ahead. In the latest news, there have been reports of Israel launching a strike on Iran early Friday in retaliation for last weekend’s drone and missile attack.

• Should tensions escalate further, risk aversion could drag the NAS100 lower.

• Signs of easing tensions may lift sentiment, potentially lending support to the NAS100.

 

    2) Big Tech earnings

4 of the so-called “Magnificent 7” tech titans are due to report their latest quarterly results.

Given how the combined weightings of Tesla, Meta Platforms, Microsoft and Alphabet represent over 20% of the Nasdaq 100, their result could spark volatility. Artificial intelligence will remain focus with investors looking for solid earnings to justify the AI-driven gains in recent months.

• A set of positive earnings may trigger a rebound on the NAS100

• Earnings that fall short of expectations may deal another blow to the index.

 

    3) Heavy hitting US data

The incoming US Q1 GDP report and PCE data are likely to influence bets around when the Fed will start cutting rates in 2024.

Considering how tech stocks remain sensitive to interest rate expectations, this could mean more volatility for the NAS100. Earlier this week, Fed Chair Jerome Powell dropped hawkish remarks which further dampened Fed cut expectations.

Traders are currently pricing in a 50% probability of a 25-basis point Fed cut by July with this jumping to 93% by September.

• The NAS100 may extend losses if US data reinforces the case for “ higher-for-longer” rates.

• Signs of cooling price pressure and disappointing GDP could boost Fed cut bets, supporting the NAS100 as a result.

 

    4) Technical forces 

NAS100 is under pressure on the daily charts with the index respecting a bearish channel.  Prices are trading below the 50, 100 and 200-day SMA while the MACD trades below zero.

• A solid breakdown and daily close below the 17,000 level may trigger a selloff towards 16,600 and the 200-day SMA at 16,330.

• Should 17,000 prove to be reliable support, this may open a path back towards the 100-day SMA at 17,400 and 17,800.