Nasdaq 100 Forecast: QQQ rises as US core PCE cools by more than forecast

US futures

Dow future 0.36% at 42315

S&P futures 0.19% at 5757

Nasdaq futures 0.1% at 20142

In Europe

FTSE 0.43% at 8295

Dax 1.64% at 19232

• Stocks extend gains post-inflation
• The data supports further rate cuts by the Fed
• US NFP & ISM services & manufacturing data next week
• Oil is set for a weekly decline on supply worries

US inflation cooled, personal spending & income eased

U.S. stocks opened marginally higher on Friday following data that supports the view that price pressures are cooling. This raises expectations that the Fed's next move could be another outsized rate cut.

The latest core PCE data show that the Fed's preferred inflation measure rose 2.7% year over year in August, up from 2.6% in July and in line with forecasts. However, on a monthly basis, inflation rose 0.1%, below the 0.2% forecasts and below the 0.2% seen in July.

Meanwhile, spending was also lower than expected, at 0.2%, down from 0.5% in July, and personal income was also weaker than expected, at 0.2%. Together, these indications point to easing price pressures.

The data comes as the market considers whether the Fed will cut interest rates by an unprecedented 50 basis points in November following the 50 basis point cut in September. According to the CME fed watch tool the market is pricing in a 52% chance of an outsized cut.

Looking ahead, attention will turn towards next week, when a raft of U.S. data will be released, including ISM services manufacturing PMIs and non-farm payrolls. Next week, jobs data will be key for the market in deciding the size of the Fed's next move. Any sense that the US labour market is cooling more than expected could unnerve investors.

Corporate news

Costco fell after posting weaker-than-expected revenue in the fourth quarter. The membership-only warehouse chain posted a 1% rise in revenue to $79.69 billion, below estimates of $79.93 billion. Also, EPS was $5.29, which was ahead of forecasts.

Bristol Myers Squibb jumped higher after US regulators approved the first new type of schizophrenia drug in decades. The labeling information for Cobenfy does not include warnings about a higher risk of mortality, further supporting the stock.

Nasdaq 100 forecast – technical analysis.

The Nasdaq 100 has extended its breakout from the symmetrical triangle pattern, rising above 20k and reaching a fresh 6-week high of 20,315. However, the longer upper wick on yesterday’s chart and today’s doji candle indicates indecision. Buyers will look to rise past 20315 towards 20,750. Immediate support is seen at 20k. Below here, the 50 SMA and falling trendline support come into focus at 19,200.

FX markets – USD falls, USD/JPY falls

USD is falling after we can expect US inflation data, which raises the likelihood of the Fed cutting rates by 50 bps in November.

EUR/USD is rising amid a weaker USD and despite ongoing concerns over the health of the eurozone economy. German unemployment increased by 17,000 from 2000 in the previous month, and eurozone economic sentiment was weaker than expected, falling to 96.2 from 96.5.

USD/JPY falls towards 142 after Iahiba, who supports further rate hikes, becomes the new Japanese PM, seeing off competition from rival Takaichi. The prospect of additional rate hikes boosts the yen.

Oil set for a steep weekly decline.

Oil prices are holding steady on Friday but are on track to book a steep weekly decline as investors weighed up expectations of increased supply from OPEC+, which offset optimism surrounding fresh stimulus from China.

WTI will lose 6% this week due to OPEC+'s recent decision to ramp up output in December. The oil market has been struggling with weakening demand in recent months.

It remains unclear whether Chinese stimulus will translate into higher fuel demand but it does offer at least a glimmer of hope to the oil demand outlook. The Chinese central bank lowered interest rate on Friday and injected liquidity into the banking system as it aims to put economic growth back on track towards the 5% target.