Nasdaq 100 Forecast: QQQ flirts with 25k on rate cut hopes

US futures                                         

Dow futures 0.24%, S&P futures 0.18%  & Nasdaq futures 0.18%

In Europe                                                                        

FTSE 0.51% & DAX -0.27%

• US stocks rise to fresh record levels
• The US government shutdown means no NFP report
• US ISM services PMI data in focus
• Oil has fallen 7.5% this week ahead of the OPEC+ meeting

Stocks keep grinding higher on rate cut expectations

 U.S. stocks are set to open higher, extending gains to fresh record highs, boosted by optimism of an imminent rate cut from the Federal Reserve.

Investors are broadly shrugging off the shutdown, which has disrupted the flow of U.S. economic data, including the highly anticipated non-farm payroll reports scheduled for today.

As a result, investors are relying on other indicators to assess economic conditions and the health of the US labour market.

The market is pricing in a 25-basis-point rate reduction in October after weaker-than-expected ADP payroll figures earlier this week. This optimism, coupled with the strengthening of tech stocks, has helped investors shrug off the ongoing US government shutdown.

The Democrats continue to stand firm against Trump’s threats to use the shutdown to fire thousands of Federal workers in a game of political revenge. The two sides remain locked in a standoff, which raises the prospect of lengthy furloughs.

Attention now turns to the ISM services PMI for September, which is due later in the day and could have a more significant market impact than usual, given the lack of other data. Forecasts are for a slight slowdown in growth to 51.7, down from 52.

Corporate news

Crypto stocks such as Coinbase and Strategy are in focus as Bitcoin rallies 9% this week to 120k, boosted by seasonality, rate cut optimism, and a revival in institutional demand.

USA Rare Earth jumps 8% pre-market after CEO Humpton said that the company is in close contact with the White House. This comes following the US Department of Energy's purchase of a 5% stake in Lithium America.

Nasdaq 100 forecast – technical analysis

The Nasdaq has risen above 24,780 to a fresh record high at 24,988. The price trades within a rising channel, although the RSI is in overbought territory. Consequently, some consolidation could be on the cards, but the uptrend remains very much intact. Buyers will look to rise above 25,000, the psychological level, and extend gains towards 25,500 as the next logical target. Last week’s low at 24,300 could offer minor support, and below here, 23,800, the August high comes into focus.

FX markets – USD falls, EUR/USD rises

The USD is falling and is set to fall 0.4% across the week, marking its worst weekly performance since July. Whilst the US government shutdown has increased uncertainty, it means the Fed is flying blind towards rate cuts. The market is fully pricing in AN October cut.

EUR/USD is rising, supported by a pick-up in activity in September. The services PMI accelerated to 51.3 in September, up from 50.5 in August, marking the fourth straight month of expansion. The composite PMI also rose to 51.2, up from 51 in August.

The GBP/USD remains unchanged despite a softer dollar, following data that showed a sharp downward revision to business activity. The PMI services index was downwardly revised to 50.8 in September, its weakest level in five months, following a 16-month high of 54.2 in August.

Oil has fallen 7.5% across the week ahead of the OPEC+ meeting.

Oil prices are stabilizing at $60.00 a barrel after falling over 7.5% this week, reaching a 16-week low.

The market is steadying ahead of the OPEC+ meeting this weekend, where the group could agree to raise production by anywhere between 274,000 and 411,000 barrels per day. This is 2 to 3 times higher than the October increase as Saudi Arabia looks to reclaim market share.

Increased output is expected as demand indicators have softened this week, marking the end of the summer season. JP Morgan believes that the oil market is heading towards a sizable surplus in the final quarter of the year.