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US Yields Rising
A fresh rise in US yields this week linked to a slew of better-than-forecast US data has seen US stocks coming under fresh pressure. Against the backdrop of rising uncertainty linked to the conflict in the Middle East, the near-term outlook for US stocks has dimmed considerably. Of course, tech stocks are bearing the brunt of weaker risk appetite as the higher yielders in the space. Bearish sentiment has been exacerbated this week by soft showing from some major tech names in Q3 earnings.
Weaker Tech Earnings
Tesla, Alphabet and Meta have all come under pressure this week linked to either weaker-than-forecast earnings or softer outlooks. Investors have been disheartened by the weaker Q4 guidance offered by name such as Meta and Tesla and with risks of further Fed tightening still a key threat, the tech sector looks vulnerable to further downside near-term.
Hawkish Fed Risks Remain
Yesterday, US advance Q2 GDP came in much higher than forecast at 4.9%, above the 4.5% the market was looking for and sharply up on the prior quarter’s 2.1% reading. On the back of this data, traders are wary once again that the Fed might still push ahead with further tightening despite Powell recently signalling that higher bond yields were effectively doing the Fed’s job for now. Looking ahead today, if we see further US data strength, the tech sector is likely to come under fresh selling pressure into the weekend.
Technical Views
Nasdaq
The sell off in the index this week has seen the market breaking below the 14544.9 level support. Price is now testing the bear channel lows and, with momentum studies turned lower, the focus is on a test of the 13782.3 level next. While price holds below 14544.9, the outlook remains bearish.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.