Nasdaq 100 Forecast :Stocks muted after hotter than expected inflation data

US futures

Dow futures +0.15% at 33850

S&P futures +0.06% at 4378

Nasdaq futures 0.06% at 15242

In Europe

FTSE +0.5% at 7658

Dax +1.4% at 15467

• US CPI rises 0.4% MoM in August vs 0.3% forecast
• FOMC minutes showed policymakers would proceed cautiously
• Delta flies higher on upbeat numbers
• Oil rises despite downward demand forecast revision

CPI rises but cautious Fed minutes support stocks

US futures trim early gains following hotter-than-expected US inflation data, which could provide more clears over the Fed's future path for interest rates.

U.S. consumer prices rose slightly more than forecast in September, up 0.4% MoM, this was ahead of the 0.3% rise expected, although it was down from the 0.6% increase in August. On an annual basis, CPI remained unchanged at 3.7%, defying expectations of a fall to 3.6%.

Meanwhile, core inflation which strips out more volatile items like food and energy, cooled to 4.1%, down from 4.3%. The data came after slightly hotter-than-expected producer price inflation yesterday.

Despite the hotter-than-expected inflation print, the main indices are managing to stay positive helped in part by yesterday’s FOMC minutes which showed that policymakers were keen to adopt a cautious approach to deciding whether to raise interest rates further.

It's worth keeping in mind that this meeting was before the recent spike in U S treasury yields, which some Fed officials since have nodded to as a reason for the central bank not to raise interest rates further. Christopher Waller, the Fed governor traditionally considered a hawk, said that the run-up in yields may have done some of the tightening work for policymakers.

Meanwhile, US jobless claims held steady at 209K roughly in line with forecasts.

In addition to US data, earnings are starting to pick up ahead of tomorrow’s bank earnings which kick earnings season off in earnest.

Corporate news

Delta Airlines is flying high after the carrier reported stronger-than-expected quarterly profits thanks to stronger demand for international travel. However, it also trimmed its full year outlook owing to higher fuel costs.

Ford is falling 2.2% after the United Auto Workers announced a surprise walkout at the carmaker's largest and most profitable plant in Kentucky.

Domino's Pizza is falling 2.3% on the open after the pizza chain missed Wall Street's expectations for quarterly revenue. Higher menu prices and rising delivery charges have discouraged squeezed and inflation-weary consumers.

Walgreens Boots Alliance is rising despite the retail pharmacy's disappointing 2024 earnings forecast and weak Q4 earnings as demand for COVID-19 vaccines and tests softens.

Nasdaq forecast – technical analysis.

After rebounding from 14445, the Nasdaq has run into its falling trendline resistance at 15315. Buyers must overcome this level to extend the recovery toward 15500, the mid-September high, and 15630, the September high. Failure to rise above the falling trendline could see sellers test the 50 & 100 sma confluence at 15080. A fall below here exposes the 20 sma at 14900.

FX markets –USD rises, EUR falls

The USD rises after US inflation data came in stronger than expected, raising expectations that the Federal Reserve could consider hiking interest rates again this year.

EUR/USD is falling after US CPI data and after the minutes of the September ECB meeting, The minutes suggested that a pause at the November meeting looks like a done deal, as the central bank becomes more concerned about growth. However, policymakers also noted that inflation risks are still to the upside. Whilst the September rate hike could have been the last one, the recent surge in oil prices put upward pressure on inflation, which could now mean that a December hike is still on the table.

GBP/USD is falling on U.S. dollar strength and after UK GDP data showed lacklustre growth. UK GDP rose  0.2% in August after falling 0.6% in July. The weak data support the view that the Bank of England may not need to raise interest rates further, given the deteriorating economic growth outlook.

EUR/USD -0.47% at 1.0570

GBP/USD -0.42% at 1.2256

Oil rises despite downward revision to demand growth

Oil prices are heading higher, benefiting from the mild risk-on mood in the market. Optimism that the Fed could soon be done hiking rates is overshadowing a downward revision for demand growth by the IEA.

A fall in US bond yields has boosted risk appetite and the oil price. Comments from Saudi Arabia's energy minister, reiterating that the country aims to support stability in the oil markets, have also helped calm oil prices after volatility surged following the Hamas attack in Israel.

Meanwhile, the IEA downwardly revised its oil demand growth forecast for 2024, pointing to more challenging economic conditions weighing on consumption. The agency now expects demand growth at 880,000 bpd versus 1 million bpd.

It also raised its 2023 demand for oil to 2.3 million bpd, up from 2.2 million.

Attention is now moving to the IEA crude stockpiles data, which comes after the API report showed that stockpiles have grown by 12.9 million barrels, much higher than the 500k barrel gain forecast. Gasoline inventories rose by 3.6 million barrels, well above the 800k expected.

WTI crude trades +0.8% at $83.35

Brent trades +1.06% at $86.39

Looking ahead

15:30 EIA crude oil stockpiles