Nasdaq Flies to Record High with S&P500 Poised to do the Same, FTSE up

Nasdaq, S&P500 & FTSE News and Analysis:

• Nasdaq (US Tech) posts strong start to the trading day – reaching record high
• S&P500 futures suggest a strong start for the index as disappointing private jobs data (ADP) helps to allay September tapering concerns
• The FTSE index (UK100) recouped yesterday’s losses but now trades well below the daily high before the close

Nasdaq Reaches New Record High in Early Trading

The Nasdaq continued its impressive run on Tuesday, buoyed by Jerome Powell’s supportive address last Friday. Markets received the message as rather dovish despite Powell indicating that the rate of asset purchases may be adjusted before year end, depending on jobs data.

Today we saw a drastic underperformance in the rate of new private sector jobs being added to the US economy (ADP) which places doubts on a positive NFP figure to be released on Friday this week. Forecasts projected 613, 000 more jobs to be added with the actual figure nearly half of that at 374,000. So, while inflation meets the Fed’s ‘substantial progress’ threshold, the last remaining piece of the ‘taper puzzle’ remains the job market.

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On the back of the Powell’s speech it comes as no surprise that AUD/USD currency pair (risk-on proxy) continues to trade higher today, along with EM currencies, as the dollar wipes out yesterday’s minor gains. Another risk-on beneficiary is tech stocks via the Nasdaq index which shot up to new highs in early trade this morning, showing no signs of slowing down.

Nasdaq (US Tech) Daily Chart: Record High

Chart prepared by Richard Snow, IG

S&P500 Eyeing New All-Time High

A positive futures price ahead of the open suggested that the S&P500 is on track to also print a new record high as the index is fueled by hopes of extended stimulus support from the Fed. Energy stocks were in prime position as oil prices rose ahead of the OPEC + meeting. With the index looking expensive, those eying bullish continuation plays may be interested in the recent high of 4480 or a deeper retracement toward the bottom of the ascending channel near the 4400 level.

S&P500 Daily Chart

Chart prepared by Richard Snow, IG

FTSE Trades up After Yesterday’s Losses

UK shares shrug off growth concerns as the FTSE traded well above the prior day’s high but failed to continue that momentum as the index surrendered some of it’s gains in the latter hours of the day. The 7170 mark is becoming ever more significant as a level of resistance, capping FTSE upside a number of times now and remains as near-term resistance. While the overall landscape remains bullish for UK equities, a break below 7120 could leave the door open to another test of the 7000 psychological level.

FTSE Daily Chart

Chart prepared by Richard Snow, IG

Educational Resources:

• New to the stock market? We have you covered via our beginner’s guide to trading stocks
• Equity indexes are made up of individual stocks. Find out how to value a stock
• A central theme this year has been centered around tapering and the inevitable rate hiking cycle. Get insight into the relationship between interest rates & stock prices.

--- Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX