Nasdaq 100 Forecast: NDX rebounds as oil prices fall and ahead of Apple earnings

US futures        

Dow futures 0.4%, S&P 500 futures 0.4%  & Nasdaq futures  0.63%

European futures

FTSE 0.25%,  DAX  0.63%

• US stocks head for a stronger open, led by tech stocks
• Nasdaq fell almost 8% in October. It's the worst month since April.
•  Apple will report after the close and trades near a record high.
• Oil prices slump 4% on optimism about diplomacy between the U.S. and Iran.

U.S. stocks rise as tech stabilises and oil prices fall

U.S. stock indices are moving higher on Monday as tech and AI-related stocks steady following a shocking October. The mood remains cautious following the AI wobble, with more tech earnings due this week, U.S. midterm elections and a full U.S. economic data calendar.

The tech-heavy Nasdaq lost over $2.5 trillion in market capitalisation last week and was on the brink of correction territory as investors grew nervous over huge AI spending while still awaiting evidence of stronger returns.

The use of debt to finance those investments is amplifying concerns, as debt-funded spending will become harder to justify if interest rates rise.

Markets are improving on Monday, with megacaps and growth stocks rising.

A fall in oil prices of around 4%, as talks between Iran and Qatari officials continue, is also helping risk sentiment.

Attention is firmly turning to the U.S. midterm elections, which will determine whether Democrats can gain control of Congress from the Republicans. Democrats are likely to win the House of Representatives, but the Senate is a more uncertain contest.

The gridlock scenario may be the most market-friendly outcome.

ISM manufacturing PMI is due later today, with services PMI on Wednesday and the nonfarm payroll report on Friday.

Corporate movers

Intel is extending losses pre-market, down around 1%, after recording its worst one-day fall since the 1980s on Friday. The chipmaker forecast quarterly revenue below market estimates and does not expect positive cash flow this year.

Sector rival AMD is due to report earnings this week, while tech giant Apple is falling ahead of its quarterly earnings after the bell.

Apple has actually sidestepped the tech sell-off quite successfully so far, trading near its record high. The question is whether earnings will support its lofty valuation.

Estée Lauder is gaining 2.6% after the beauty products maker raised its annual sales and profit forecasts.

Nasdaq 100 forecast – technical analysis

After running into resistance at 31,365, the Nasdaq has trended lower, breaking below the 50 EMA and another key support level before finding support at the 200 EMA around 28,300. The price has respected this support and rebounded slightly.

The price holding above the 200 EMA keeps the longer-term outlook constructive, although the near-term picture remains bearish.

Sellers would need to break below the 200 EMA at 28,300 to gain traction towards the July low of 27,000.

On the upside, buyers would need to rise above the 29,000 resistance zone to turn attention to the 50 EMA at 29,700. From there, 30,000 comes into focus, ahead of 30,200, the August high.

FX markets – USD falls, GBP/USD rises

The U.S. dollar has fallen to a monthly low against a basket of currencies as oil prices decline significantly and investors look ahead to the U.S. midterm elections, tech earnings this week and Friday’s nonfarm payroll report.

Expectations of a Fed rate hike in December have eased to 72% after the Fed left rates unchanged last week.

EUR/USD is rising as falling oil prices overshadow weaker-than-expected German retail sales data. Lower oil prices are also easing some stagflationary fears stemming from elevated energy prices. This is offsetting data showing that German retail sales fell unexpectedly by 2% in September. Signs of consumer weakness add to the ECB’s dilemma over further rate hikes ahead of the December meeting.

GBP/USD is rising amid a weaker U.S. dollar and declining oil prices. Attention is turning to the Bank of England rate decision, where the central bank is expected to hike rates by 25 basis points to 4%, marking the first hike since 2023. The market will be looking for signs of further hikes heading into next year.

Oil falls 4% as hopes of diplomatic breakthrough ease risk premium

Oil prices are falling over 4% on Monday as talks between Iran and Qatari officials continue, fuelling hopes of a diplomatic end to the Middle East conflict.

Iranian negotiators have left talks with Qatari mediators aimed at ending the war with the U.S., and a draft proposal is being circulated. Renewed hopes for a breakthrough are removing some of the risk premium from oil.

However, there are still fears that tensions could re-escalate after the U.S. midterm elections.

The talks come after a recent increase in taxes on oil tankers transiting the Strait of Hormuz, while attacks on Saudi Arabia’s energy infrastructure remain a concern.