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Nasdaq 100, DAX 30, Nikkei 225 Forecasts: Neutral
- The Nasdaq 100 eagerly awaits earnings from Apple, Amazon, Facebook and more
- German and Euro area GDP data is also due in the week ahead, a key event for the DAX 30
- The Nikkei 225 will set its sights on the fast-approaching interest rate decision from the Bank of Japan
Nasdaq 100 Forecast
Earnings season is in full swing and the week ahead will see the release of quarterly reports from some of the world’s largest publicly traded companies. Apple, Amazon and Facebook are scheduled to report after Thursday’s close, a set of stocks that collectively account for more than 27% of the entire Nasdaq 100. Blue chip names like Boeing, General Electric, Pfizer and Ford will also report next week, but the speculative appetite in the big-tech names should afford them the most influence and market-moving potential.
To that end, market participants have high expectations for the FANGMAN group given their lofty share prices and after their blowout reports last quarter. Therefore, stocks like Apple, Amazon and Facebook will be highly scrutinized and could see a less-than-perfect report result in a seemingly drastic price decline.
Either way, forecasting directional moves following an earnings report is incredibly difficult, so strategies that can benefit from heightened implied volatility may be ideal at this stage.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (September 2020 – October 2020)
Regardless, the Nasdaq 100, Dow Jones and S&P 500 may wait to stage serious moves until the Presidential election has passed. Given the massive uncertainty surrounding the vote, many traders are likely hesitant to hold significant exposure ahead of such an important event. It could be argued post-earnings price moves might be hampered to some degree, at least until the political landscape has returned to more stable footing.
The DAX 30 is set to receive more traditional economic data in the form of Euro area and German GDP readings followed by an ECB rate decision. Struck with another coronavirus wave, Europe may be on pace to disappoint growth forecasts as a slowdown was already hinted at by economic figures toward the end of the prior quarter.
DAX 30 Price Chart: 4 – Hour Time Frame (June 2020 – October 2020)
The DAX might take notice of a poor result, but I would suspect a GDP-miss might already be priced in to some degree. Nevertheless, the DAX seems tilted to the downside in the week ahead. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
Nikkei 225 Forecast
Shifting our focus to the Japanese Nikkei 225, traders will have their hands full with an upcoming interest rate decision from the Bank of Japan. After staging an admirable recovery from the coronavirus, Nikkei 225 gains have slowed to a crawl and the index has made little progress since early September. While the upcoming BOJ meeting will likely see a continuation of the norm for Japan’s monetary policy path, the lack of progress might suggest the Nikkei 225 is awaiting a broader uptick in risk appetite.
Nikkei 225 Price Chart: Daily Time Frame (November 2019 – October 2020)
With that said, the Nikkei might track moves in US indices as they await earnings and the looming Presidential election. Since little change is expected domestically in Japan, these outside factors could very well deliver the spark required to push the Nikkei above its recent highs. Still, the outlook remains encouraging. Until these outside issues are resolved, however, the forecast remains neutral or cautiously bullish.
–Written by Peter Hanks, Strategist for DailyFX.com