Week ahead: focus on Nasdaq 100 as it aims for all time high

Global stocks lost the momentum as investors started to worry about the escalating trade conflict between the United States and China. In Europe, the DAX index, CAC 40, and FTSE 100 declined by more than 1% while in the United States, the Dow Jones and Nasdaq 100 declined by almost 1 per cent.

The euro was the best-performing currency last week as investors reacted to the $826 billion stimulus package proposed by the European Commission. The funds will be given to countries as grants, which has irked some of the frugal countries like Netherlands, Denmark, and Austria. The EURUSD pair rose by almost 2%. The Canadian dollar also rose because of the rising crude oil prices.

Focus to remain on PMIs

In the coming week, we will receive important manufacturing and service PMI data from most countries. The data will start on Sunday when China Logistics will release the manufacturing and services PMI data for China. Analysts expect the manufacturing PMI to climb to 51.0 from the previous 50.8. A private survey by Caixin will be released on Monday but this is expected to show that the PMI declined to 49.6.

Other key PMIs to watch will be from the UK, eurozone, Germany, and the United States.

ECB, BOC, and RBA

It will be a busy week for central banks as ECB, BOC, and RBA are expected to release their rates decision. The three central banks are expected to leave interest rates unchanged. The ECB will likely commit to more asset purchases while RBA will be slightly muted because the Australian economy is stabilizing. The Canadian central bank will also be neutral because the number of coronavirus cases has started to fall while crude oil price has started to recover.

Nonfarm payrolls data

The Labour Department will release the nonfarm payrolls data on Friday. These numbers will move the DXY and other currency majors like EURUSD, GBPUSD, and USDJPY. Analysts expect that the unemployment rate surged to 19% with the NFP declining by more than 10 million people. That means that the NFP will have dropped by more than 30 million people in the past two months. On Wednesday, ADP will release the private payrolls data, which are expected to decline by more than 9.5 million people. These numbers will move the Nasdaq 100.

Other key data to watch

There will be other key data to watch next week. Some of these are the Australian retail sales and GDP, New Zealand terms of trade, Turkish CPI, German employment data, crude oil inventories, and Japanese household spending.

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Nasdaq 100 outlook

The tech-heavy Nasdaq 100 has lagged the Dow Jones for the past two weeks. That is partly because investors have been moving back to value. In the coming week, the Nasdaq 100 will react to earnings from companies like Zoom Video, Mogo, and Crowdstrike.

The Nasdaq 100 is trading at $9,475. On the daily chart, the price is significantly above the 78.6% Fibonacci retracement level. It is also above the 100-day and 50-day averages and a few points below the all-time high of $9,765. Therefore, there is a possibility that the index will continue rising next week since bulls appear to be in control.

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