Nasdaq 100 Forecast: QQQ steady with US elections & earnings in focus

US futures

Dow future 0.02% at 40,248

S&P futures 0.02% at 5538

Nasdaq futures -0.1% at 19800

In Europe

FTSE -0.50% at 8167

Dax 0.67% at 18538

Kamala Harris appears to have the backing for a Democrat nomination
Earnings season ramps up
Tesla & Alphabet report after the close
Oil falls ahead of API inventory data

US elections, Tesla & Alphabet earnings

U.S. stocks are rising, adding to yesterday's gains as US elections remain in focus and earnings season ramps up.

Reports point to Vice President Kamala Harris, who appears to have the backing for a democratic nomination to run against Republican Donald Trump in November's elections.

President Joe Biden endorsed Harris at the weekend after he said he would no longer be seeking reelection. Harris has her work cut out after Trump widened his lead in the presidential race following his official nomination at the Republican National Convention last week.

Amid a quiet economic calendar, attention turns to the release of key earnings reports, including two magnificent 7. These come as the tech sector fell sharply last week after expectations of a Donald Trump presidency and Fed rate cut bets prompted a rotation into sectors that have underperformed so far this year

Corporate news

Tesla is to report Q2 earnings as the share price trades up 25% in July. Wall Street expects revenue to be $24.7 billion in Q2, down from the previous year, which is not surprising given that Tesla's deliveries also fell on a yearly basis in Q2 to 444,000. Meanwhile, EPS is expected to drop 40% to $0.46 with margins under pressure as Tesla has cut vehicle prices multiple times, taking it all on its once impressive margins.

Alphabet is due to report earnings as it trades down from its all-time high. Wall Street expects EPS of $1.85 on revenue of $84.29 billion. The share price trades up 30% so far this year , outperforming its peers MSFT and AMZN. The focus will be on generative AI hype and whether this translates into growth. Ad revenue will also be under the spotlight, as well as an expected strong performance from the cloud.

Spotify is set to open 13% higher after posting stronger-than-expected earnings. The company posted EPS of $1.35, well ahead of the $1.05 forecast, although revenue fell short of expectations at $3.81 below $3.82. Gross margins were 29.2% ahead of the 28.1% forecast.

Coca-Cola is set to open higher after the drinks maker lifted its annual sales and profits forecast thanks to steady demand. Coca-Cola’s average price rose 9% in Q2, while unit case volumes rose 2%, showing consumers were willing to buy even at higher prices.

General Motors is set to open 5% higher after the car giant beat Q2 profit and revenue forecast and lifted its annual profit guidance for a second time this year, boosted by strong pricing and demand for petrol-powered trucks.

UPS is set to open a percent lower after the package delivery service posted disappointing Q2 earnings and revenue weakness in the domestic business.

Nasdaq 100 forecast – technical analysis.

The Nasdaq 100 found support at 19460 and is attempting to grind higher. The price is testing the rising trendline resistance dating back to mid-April. A rise above here brings 20,000 back into play ahead of 20,760 and new all-time highs. A break below 19460 creates a lower low and brings the 100 SMA into focus at 18,700.

FX markets – USD rises, GBP/USD falls

The USD is rising as the markets continue to watch political developments surrounding the election and before mid-tier data release.

EUR is falling after ECB policymaker De Guindos said that Inflation is cooling in line with projections before the central bank reassesses its monetary policy stance in September. He added that he sees signs that wage growth is easing. Strong wage growth and a tight labour market prevented further rate cuts.

GBP/USD is falling further from last week's yearly high as investors await fresh catalysts. This year, the pound has been one of the top-performing currencies against the US dollar. Stickier than expected, UK service sector inflation has seen the Bank of England postpone interest rate cuts. PMI data tomorrow will provide further clarity on the health of the UK economy's service sector inflation.

Oil falls ahead of API data.

Oil prices fall further after losses yesterday and trade around a monthly low amid concerns over ample supply and weaker demand.

Oil prices have fallen sharply in recent sessions amid concerns over the economic recovery in China, the world's largest oil importer. Weaker-than-expected GDP data spurred selling in commodities, and the People's Bank of China's move to cut interest rates is considered insufficient to lift demand.

US inventory data will be in focus. The API figures are expected to show a 2.5 million barrel draw in crude oil inventories and a 300,000 barrel draw in gasoline stockpiles. A larger-than-expected draw could support oil prices.

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