Indices

It’s been a tough period for the S&P 500 and Nasdaq 100. But substantial moves in one direction rarely last long, especially when they occur quickly. With bulls successfully defending Monday’s lows despite significant selling pressure, and with price signals hinting we may have seen a near-term bottom, long setups may be worth pondering.

US interest rate expectations are becoming increasingly influential on Japan’s Nikkei 225, both through the FX channel impacting forecasts for exporter earnings and sentiment towards the outlook for global economic growth. Other factors, such as commentary from BOJ, come across as secondary factors for now.

After starting the day well in the green, the major US indices were coming under a bit of pressure again at the time of writing, with investors unable to shake off the recent turmoil impacting financial markets. For now, the Nasdaq 100 forecast remains mildly bearish after the recent breakdown. More evidence of a bottom is needed to excite the bulls again even if there is a sense of calmness observed in price action over the past two days or so.

The absence of new bearish news and a light economic calendar have helped improve risk appetite somewhat. While not completely out of the woods, the market's realignment with fundamentals offers a more optimistic outlook. Stay tuned for further updates as the DAX tries to establish a base around its 200-day average.

We’re seeing signs of market stability after a volatile and bearish start to the week. Wall Street indices clawed back some of Monday’s losses. And that could see support for metals such as gold, silver and copper. At least over the near term.

With USD/JPY holding above key support after the daily RSI reached its most oversold level since 1996, the 1-hour bull flag could tempt bulls. The ASX 200 also shows the potential for another leg higher, even if small.

Watch for an NDX close either above the 18,400 level (which could come as soon as today) or a close below the 200-day MA near 17,800 to tip the odds in one direction or another.

The Reserve Bank of Australia (RBA) refrained from delivering a dovish shift following its August monetary policy decision, acknowledging that while the economic outlook remains highly uncertain, inflation remains above target and is proving persistent. It's still refusing to rule anything in or out.

The FTSE was unable to add to its gains from the day before, after the Bank of England cut rates by 25 basis points in a close decision that, on balance, appeared less dovish than the vote split would have had you believed. A sharp drop in Japanese shares overnight dented investor confidence somewhat, which came hot on the heels of a technology-fuelled rally on Wall Street on Wednesday.

Risk appetite made a swift comeback when the Fed opened the door to beginning their rate-cut cycle in September. The question is whether Wall Street indices, gold or WTI crude can extend their gains.

Today's gains were largely driven Nvidia’s 11% surge, as beaten-down chipmakers rallied. Meanwhile, softer economic data further boosted bets that the Fed will signal a rate cut in September, with the potential for two more cuts being priced in before the year is out. The Nasdaq 100 forecast remains bullish from a technical point of view with the index holding above a key bullish trend line.

AUD/USD is under pressure while ASX 200 SPI futures are flying following Australia’s Q2 consumer price inflation report, reflecting surprisingly modest underlying inflationary pressures that all but extinguish the risk of another RBA rate hike this cycle.

Chinese markets are performing poorly despite policymakers cutting key policy interest rates last week. It’s been that way since the conclusion of the Third Plenum earlier this month, an event that delivered little in the way of concrete measures to help appease concerns about the trajectory for the economy.

Tech earnings from Microsoft, Apple, Meta and Amazon to set the early tone for UK markets this week before focus the switches to whether the Fed and Bank of England will cut interest rates. Early signals suggest traders want to buy risk.

The robust rally in the first half of the year set high expectations, particularly in the technology sector. While some sector rotation into energy and financials occurred last week, it wasn't sufficient to prevent a broader market decline. Disappointing earnings from key players like Alphabet and Tesla have led to revised investor expectations.

After a hefty pullback, 19k looms for Nasdaq futures traders. Yet the higher timeframes suggests there could further downside even if it manages a bounce from nearby support. The ASX may fare better as its pullback is so far pale in comparison.

You don’t see unwinds of Japanese yen carry trades like we’re seeing right now outside of crisis periods. It doesn’t feel like we’re in a crisis, making me wonder just how long the current bearish move will last?