Nasdaq100 Forecast: Stocks slip after a strong rally

US futures

Dow futures -0.37% at 37451

S&P futures -0.6% at 4731

Nasdaq futures -0.80% at 16511

In Europe

FTSE -0.05% at 7686

Dax -0.48% at 16623

• Fed rate cut expectations remain in focus
• Ai hype boosted Nasdaq 2.4%
• Boeing falls for a second day
• Oil rebounds after yesterday’s losses 

Fed rate cut expectations are in focus ahead of CPI data

US stocks point to a weaker start after strong gains in the previous session and as investors wait cautiously for US inflation data later in the week.

The Nasdaq100 closed 2.4% higher yesterday, its strongest daily performance since November, boosted by AI optimism as Nvidia rallied to a record high. The chip stock unveiled three new chips that will help bring AI to personal PCs.

Attention remains on inflation data, which is due later this week and will offer further clues about the Federal Reserve's path for interest rates.

Federal Atlanta Fed president Raphael Bostic, a voting member this year, said he sees the first cut in the third quarter and leans towards keeping rates high while inflation is above 2%. His hawkish comments have weighed on stocks and boosted the USD.

The market has been steadily reining back Federal Reserve interest rate cut expectations since the start of the year, and according to the CME Fed Watch tool, the market is now pricing in a 57% probability of a rate cut in March, down from over 70% at the start of the year.

Corporate news

Boeing points to further losses after the US National Transportation Safety Board continues investigating the recent mid-air door blowout. Other airlines are also trading lower.

Netflix is set to open 2% lower after Citigroup downgraded the streaming platform to neutral from buy.

Nasdaq100  forecast – technical analysis

After rebounding off support at 16175, the Nasdaq 100 struggles to extend the recovery around the 20 SMA at 16600. A rise above here is needed to extend gains towards 16970. Should sellers successfully defend this level, bears will look to retest 16175 to create a lower low.

FX markets – USD rises EUR/USD falls

The USD is rising, recovering losses from the previous session as investors are again focused on the Fed. Atlanta Fed president Raphael Bostic pushed back on rate cut bets, saying he supports high rates for longer while inflation remains above 2%.

EUR/USD is falling after data showed that German industrial production unexpectedly fell 0.7% Mo M after falling 0.4% in October, which points to the German economy heading toward a technical recession. At the same time, unemployment in the eurozone fell to a record low of 6.4%, which could add to the ECB's caution about cutting rates.

GBP/USD is falling after the British Retail Consortium reported that retailers saw lackluster sales across the critical Christmas period, raising concerns that the UK could be heading towards a recession. The data comes as figures from Barclays also showed weaker spending growth, with customers spending 2.3% more on credit and debit cards in December compared to a year earlier.

EUR/USD -0.18% at 1.0934

GBP/USD -0.24% at 1.2717

Oil rebounds after yesterday’s selloff

Oil prices are rebounding after yesterday's steep sell-off. Oil dropped over 4% yesterday on the news that Saudi Arabia slashed its official selling price of oil for Asian buyers to a 27-month low.

The move highlighted concerns over demand in the region, particularly for China, the world's largest oil importer.

Today, geopolitical tensions in the Middle East are back in focus, as well as an ongoing supply outage in Libya, which is offering support to prices. The closure of Libya's largest oil field, which provides around 300,000 barrels per day, has lifted the price away from the $70 a barrel mark.

Looking ahead, API oil inventory data will be in focus ahead of Chinese and US inflation data later in the week.

WTI crude trades +1.65% at $72.07

Brent trades +1.6% at $77.20