Nasdaq 100, Dow Jones, DAX 30 Price Outlooks:
Nasdaq 100 Forecast
Earnings season has finally arrived, bringing with it a closer look into the health and productivity of some of the market’s most important stocks. Beginning with the big banks, the market got an early look at a common concern amongst the financial institutions – the prospect of a prolonged and unusual recession. While concerning, the Dow Jones, Nasdaq 100 and S&P 500 appeared relatively undeterred as a rather volatile week culminated in only minor losses for the Nasdaq.
Source: Bloomberg via Justin McQueen
That said, earnings-related volatility may still be in its early stages as only Netflix has reported, resulting in a severe decline. As the first of the FANGMAN members, Netflix’s disappointing report has placed the Nasdaq in a precarious position and sentiment been similarly damaged. Now, the market will look to another major player in Microsoft – currently responsible for about 11.5% of the Nasdaq. The tech company is slated to report Wednesday after the bell and another poor result could compound Netflix’s damage to sentiment and risk appetite.
Dow Jones Forecast
Similarly, the Dow Jones will await earnings from key components like Lockheed Martin and Coca Cola. While Microsoft is a member of the Industrial Average, its weighting on the index is much lower than that of the Nasdaq 100 so an adverse price reaction would have less impact on the Dow than the Nasdaq. Either way, I would argue sentiment is the more important factor in these reports and if the golden eggs of the recent stock recovery fail to deliver, investors may reconsider present valuations.
( 15:07 GMT )
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Weekly Stock Market Outlook
DAX 30 Forecast
Shifting our focus to the German DAX 30, history would suggest the index will closely track price action in the US markets as they have long been the leaders in speculative risk appetite. While it may seem unconventional, I would argue the most important factor for the DAX next week will be entirely detached from Germany itself, instead falling to US earnings as the Nasdaq continues to set the tone for broader equity price action. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com