The NASDAQ 100 index has been under severe selling pressure throughout 2022 as concerns about the impact of the Federal Reserve’s aggressive interest rate hikes on corporate earnings and the broader economy have been rising. Central banks have started what is likely to turn out to be the most aggressive cycle of interest rate hikes since the late 1980s.
The spectre of significantly higher interest rates this year has sent shockwaves through global markets as investors fear that central banks efforts to contain inflation will end in recession. The interest rate sensitive benchmark has been the hardest hit of the U.S. indices, declining from a high of 16,767 posted in November 2021 to a low of 10,440 in mid-October 2022, erasing more than 37% of its value.
The market is currently pricing in the fourth-straight 75 basis points increase when the Fed meets on the 1 – 2 of November. While the Fed is clearly not done with raising interest rates as inflation remains uncomfortably high, the tech heavy index rallied sharply on Friday, ignited by hopes that the Fed could start slowing the pace of rate hikes in December. Market participants welcomed a report from the Wall Street Journal last week that hinted some Fed officials are concerned about overtightening. San Francisco Fed President Mary Daly was among those who have this view, saying that the central bank should start discussing the potential of a smaller rate hike in December.
For as long as government bond yields are rising equity markets are likely to remain under selling pressure. We suspect markets could start to turn the corner whenever the tightening cycle approaches terminal levels.
Earnings season in the U.S. is kicking into a higher gear with four of the biggest companies by market cap, constituents of the NASDAQ 100, reporting earnings results this week. Microsoft and Alphabet are due to report on Tuesday the 25th of October, followed by Amazon and Apple on Thursday the 27th of October. Given their heavy weightings on the NASDAQ 100 their performance could be crucial for the future direction of the index.
The US economy contracted an annualized 0.6% on QoQ in Q2 2022, matching the second estimate, and confirming the economy technically entered a recession, following a 1.6% drop in Q1.
On Thursday, the 27th of October, the U.S. Bureau of Economic Analysis will release its first look at Q3 GDP, with the economy expected to have expanded at a rate of 2.5% after two consecutive quarters of contraction in the first half of the year.
While the current rebound, which is seen as unwinding oversold momentum conditions, could extend a bit further, the index is not out of the woods yet and faces stiff dynamic resistance exerted by its medium-term down trend line crossing at 12,600. At this juncture in time, we don’t see a reversal of the medium-term down trend and levels to 9,750 appear feasible in the coming months.
Active traders looking to gain magnified exposure to the QQQ ETF may use our 3x Long Tech100 ETP to take advantage of expected short-term rebounds, and our -3x Short Tech100 ETP to capture expected subsequent declines.
Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.
Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.
Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.
Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.
Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.
È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.
Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.