Nasdaq 100, DAX 30 & FTSE 100 Price Outlooks:
- The Nasdaq 100 reached record heights on Friday, completing the v-shape recovery in price
- The DAX 30 had a remarkable week of its own, but the possibility of an EU auto tariff may crimp gains
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Nasdaq 100 Forecast
Outlook: Neutral
The Nasdaq 100 surged to a new record high on Friday, brushing aside a flurry of fundamental threats and wobbly economic figures in the process. As a result, the move effectively completed the long discussed and heavily debated V-shaped recovery, at least from a price perspective. That being said, it is still far too early to deem an equally miraculous recovery in the underlying economy and this may prove to be a crucial weakness for the tech-heavy Nasdaq 100.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (February – June)
As it stands, more than 40 million Americans are unemployed and the unemployment rate has climbed by more than 10% in just three months. Elsewhere, uncertainty from the looming presidential election also remains and US-China tensions have been recently joined by possible US-EU trade tension with President Trump’s threat of auto tariffs on Friday if the bloc did not “lower the lobster levy.”
Despite all of the uncertainty and potential flashpoints, the Nasdaq 100 has climbed to new heights which makes it more difficult to argue for an abrupt and immediate reversal lower. To be sure, it is my opinion that the Nasdaq, Dow Jones and S&P 500 will eventually have to reckon with the real economic pain dealt by the coronavirus, but to suggest the recovery rally is over next week may be presumptuous.
Further still, the event risk of the June 10 Federal Reserve interest rate decision could see forecasts thrown out the window if the central bank pursues an unexpected policy path. Therefore, the outlook for the Nasdaq 100 in the week ahead is neutral.
DAX 30 Forecast
Outlook: Neutral
Much of the same can be said for the DAX 30, which enjoyed an incredibly bullish surge higher last week but still has to negotiate worrisome fundamentals. Add in the fresh risk of auto tariffs, and the fundamental outlook is far from encouraging. However, the Euro area’s newfound unity and ECB’s policy path have evoked a sense of stability and commitment that may provide a tailwind for the German equity index in the weeks to come
DAX 30 Price Chart: 4 – Hour Time Frame (February – June)
FTSE 100 Forecast
Outlook: Bullish
Last on our list is the FTSE 100 which awaits GDP data due Friday. After staging a break higher last week, a strong GDP print could allow for a committed continuation higher. Until then, the FTSE will likely track broader risk trends and investor sentiment, which at this stage seems to be full blown risk appetite. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
FTSE 100 Price Chart: 4 – Hour Time Frame (February – June)
--Written by Peter Hanks, Analyst for DailyFX.com
