Dow Jones, Nasdaq 100, DAX 30, FTSE 100 Forecasts for the Week
Dow Jones, Nasdaq 100, DAX 30, FTSE 100 Forecasts:
- The Dow Jones and Nasdaq 100 enjoyed a boost from cooled trade tensions, while an upcoming Fed-blackout period could allow for US equities to extend recent gains
- Across the Atlantic, the DAX 30 will await an ECB rate decision and the FTSE 100 will remain glued to the ongoing Brexit saga
- Learn the different facts and opportunities when trading the Dow Jones, Nasdaq and S&P 500
Dow Jones, Nasdaq 100, DAX 30, FTSE 100 Outlook for the Week Ahead
The major stock indices saw widespread strength last week as it was announced the United States and China would meet “sometime in October” to negotiate trade issues. While news of the meeting sparked jubilation among many investors, evidenced by the corresponding price action, history suggests market participants should take the announcement with a hefty serving of salt. Recent months have seen a cyclical nature of trade talks emerge, with the cycle repeating time and time again and asset prices following suit.
Dow Jones Forecast
As recently as last month, trade talks were “scheduled” for sometime in September. Since then, it was revealed the two sides were unable to agree to a meeting date – typically an easier part of negotiations. Shortly thereafter it was announced the talks would not take place in September but would be pushed to October, meaning trade hostility would be paused during China’s Communist Party meeting that begins in early October. The meeting has been delayed considerably due to the ongoing trade war and Hong Kong protests, but with the 70th anniversary of the People’s Republic of China on October 1, party leaders will finally convene.
Dow Jones Price Chart: 4 – Hour Time Frame (June – September) (Chart 1)
With that in mind, trade hostility may take a backseat until party leaders end their conference and return to the negotiating table – likely with an agreed upon idea of how to proceed in the conflict. Until then, the Dow Jones may look to continue its breakout higher in the week ahead alongside receding risks of recession due to the increasingly positive spread between the 2s10s yields.
Nasdaq 100 Forecast
The Nasdaq could enjoy similar price action but runs the risk of being mired in regulatory concerns. Last week it was reported state Attorney Generals are readying an antitrust probe into Google. The probe is likely the first in a series that will look to target the likes of Facebook, Microsoft, Apple and Amazon. Since the investigations are unlikely to be concluded anytime soon, they will provide uncertainty for the foreseeable future – something that investors despise. Regardless, the Nasdaq 100 looks poised to continue higher in the week ahead.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (June – September) (Chart 2)
DAX 30 Forecast
Shifting to European equities, the DAX 30 will await a rate decision from the European Central Bank on Wednesday where the bank is expected to cut rates. With the cut expected to be the first in a series, any indication that the bank will be less dovish than expected could weigh on the DAX. Like the Nasdaq, the DAX will also have to weather uncertainty created by US regulators.
DAX 30 Price Chart: 4 – Hour Time Frame (June – September) (Chart 3)
To that end, it was announced on Friday that the US Department of Justice also opened an antitrust probe into various automakers – including Volkswagen. It is also important to note the looming threat of potential auto tariffs from the Trump administration, which can be implemented up until the November 14 deadline.
FTSE 100 Forecast
Moving to the FTSE 100, the British equity Index will continue to take its cues from the ongoing Brexit saga. Wednesday saw Prime Minister Boris Johnson lose his majority. Evidently, markets believe the vote reduced the odds of a no-deal Brexit. Subsequently, the UK House of Lords passed a bill on Friday that will force PM Johnson to seek a delay to the October 31 deadline. Nevertheless, an extension must be unanimously agreed to by all members of the European Council – creating an opportunity for dissent among the 27 other members.
FTSE 100 Price Chart: 4 - Hour Time Frame (June – September) (Chart 4)
Thus, the FTSE 100 will remain ensnared in uncertainty during the week ahead. Apart from Brexit, the FTSE will also look to the commentary that accompanies the ECB rate decision. An unexpectedly hawkish ECB could harm the FTSE’s outlook as equity markets in continental Europe slide. For further technical and fundamental analysis on the various equity markets throughout the week, follow @PeterHanksFX on Twitter.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.