Nasdaq 100 forecast: Nasdaq 100 rises on rate cut optimism

US futures

Dow futures +0.32% at 35439

S&P futures +0.49% at 4575

Nasdaq futures +0.6% at 16108

In Europe

FTSE -0.24% at 7440

Dax +1% at 16100

Dovish Fed commentary boosts rate cut hopes
Market prices in a 40% probability of a March rate cut
Salesforce to report after the close
Oil rises on Black Sea supply issues & ahead of OPEC+ meeting

Dovish Fed commentary boosts rate cut hopes

U.S. stocks are pointing to a higher open, extending gains from the previous session after Federal Reserve officials boosted bets that the US central bank has not only ended its rate hiking cycle but is also considering when to start cutting interest rates.

Federal Reserve governor Christopher Waller has boosted sentiment and is driving a risk-on move in the market after suggesting that US central bank monetary policy was well positioned to bring inflation back to the 2% target. He also said that should inflation continue lowering, the Fed could start to cut interest rates.

His comments come as US headline inflation cooled by more than expected to 3.2% YoY in October and ahead of tomorrow's core PCE index, the Federal Reserve's preferred inflation measure: the reading is expected to ease to 3.5%, down from 3.7%, marking its lowest level since mid-2021.

Ahead of tomorrow's inflation figures, the focus today will be on the GDP data for the third quarter, which is expected to confirm 3.5% growth Q&Q, up from 1.7%. The inflation subcomponent of the reading will also be in focus, with signs of cooling inflation supporting the view that the Fed will cut rates sooner. The market is pricing in a 40% probability that US central bank will trim rates by 25 basis points in March.

Corporate news

Berkshire Hathaway will be in the spotlight after Charles Munger, the vice chairman of the vast conglomerate, passed away. He was broadly known as Warren Buffett's right-hand man who helped the investing legend turn Berkshire Hathaway into an investment empire worth $800 billion.

General Motors is set to open 8% higher after the auto giant reinstated 2023 guidance and plans to lift its dividend by 33%.

Salesforce is due to report earnings after the close. Wall Street expects the company to post EPS of $2.06 on revenues of $8.7 billion. Shares are up 70% so far this year.

Nasdaq100 forecast – technical analysis

After several sessions in consolidation mode, the Nasdaq 100 could be ready for its next step higher. The Nasdaq100 rising above the July high and closing yesterday above the 16000 round number is keeping buyers hopeful of further upside. Bulls are looking towards 16360, the December 2021 high, ahead of 16800, the 2021 peak. A reversal, a break back below 16000, could bring support at 15790 the August high and 15500 the September high into focus.

FX markets – USD rises, GBP/USD hits 1.27

The USD selloff has stabilized, but the USD still hovers around a three-month low. Bets that the Federal Reserve has completed its rate hiking cycle and dovish Fed comments put pressure on the US dollar ahead of tomorrow's inflation data.

EUR/USD is falling with inflation figures in focus. Spain's inflation cooled to 3.2% YoY, down from 3.5%, defying expectations of a rise to 3.7%. German inflation fell -0.4% MoM, down from 0%. The data comes ahead of tomorrow's eurozone inflation figures and also supports the view that the ECB could cut rates in Q2 next year.

GBP/USD is rising to 1.27, a fresh three-month high, as the pound is supported by hawkish BoE commentary. Yesterday, central bank governor Andrew Bailey said he would do whatever it takes to get inflation back to the target 2% level. BoE policymakers have been pushing back against market expectations of a rate cut early next year.

EUR/USD -0.06% at 1.0983

GBP/USD +0.05% at 1.27

Oil rises on Black Sea supply issues & ahead of OPEC+ meeting

Oil prices are rising for a second straight day and are on track to book a weekly gain after five straight weeks of losses.

Prices have gained as investors turn their attention to the OPEC+ meeting this week and amid supply disruptions caused by a storm in the Black Sea.

Oil prices jumped 2% on Tuesday on rising expectations that the OPEC+ group will extend or deepen supply cut when they meet on Thursday. Talks between the oil-producing group have been difficult, but the meeting is still expected to go ahead as scheduled. The market is reading this as a positive sign and an indication that the oil production cuts will be extended into the new year.

Separately, a storm in the Black Sea has disrupted supply in the region of 2 million barrels per day from Kazakhstan to Russia. Kazakhstan's largest oil field has reportedly cut output by over 50%.

Meanwhile, a fall in US crude inventories is also supporting the price of oil. According to the API, U.S. crude inventories dropped by 817K last week. Attention now turns to the weekly U S government data on stockpiles due later.

WTI crude trades +1.6% at $77.70

Brent trades +1.51% at $82.54

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