Chart created with TradingView
Nasdaq 100, DAX 30, FTSE 100 Fundamental Forecasts: Bearish
- Despite an accommodative Fed, the Nasdaq 100 has been a major source of weakness
- The DAX 30 will closely track risk appetite led by the US indices
- The FTSE 100 remains vulnerable to Brexit uncertainty, a headwind that has kept it contained
Nasdaq 100 Fundamental Forecast
US equities suffered another turbulent week as technology stocks continue to be a source of volatility. That said, broader risk aversion has been mostly absent with assets like the Australian Dollar and crude oil enjoying gains and European equities suffering only modest declines. In the US, however, stocks like Apple and Microsoft continue to erode the tech-heavy Nasdaq which has been on the cutting edge of risk appetite since March.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (July 2020 – September 2020)
Despite three consecutive weeks of losses for the Nasdaq 100 and S&P 500, the indices have seen little change on the fundamental side. The Federal Reserve verified its commitment to near-zero rates last week, signaling a stable monetary policy environment. Thus, many market analysts have attributed the selling in US technology stocks to a period of profit-taking.
While it is impossible to attribute recent declines to a single theme, mere profit-taking would help explain the lack of broader risk aversion. However, ongoing uncertainty around the Tik Tok acquisition could be fueling jitters in the technology space as the risk of more forceful technology transfers grows.
Further still, freshly released details on a potential tax plan proposed by the Biden campaign could have unnerved Wall Street slightly. Either way, the Nasdaq 100 looks to remain the bellwether for equity markets in the week ahead, so keep a close eye on its price action and technical landscape.
( 15:09 GMT )
Recommended by Peter Hanks
Weekly Stock Market Outlook
DAX 30 Fundamental Forecast
The DAX 30 is in the midst of a quiet period as it remains trapped in a relatively narrow trading range. Without many scheduled catalysts on the economic calendar this week, the DAX 30 could follow broader risk trends, those likely to be set by the Nasdaq 100 and leading technology stocks. Consequently, the DAX looks poised for a rather quiet week barring a technical break.
DAX 30 Price Chart: 4 – Hour Time Frame (June 2020 – September 2020)
FTSE 100 Technical Forecast
Conversely, the FTSE 100 has many themes to juggle. Considerations of a new quarantine lockdown and continued Brexit uncertainty are just two of the major issues, both of which could create volatility for the index. As a result, the FTSE 100 appears vulnerable and could experience further losses until a resolution to these uncertainties is offered. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
FTSE 100 Price Chart: 4 – Hour Time Frame (May 2020 – September 2020)
–Written by Peter Hanks, Strategist for DailyFX.com