This Week: Can NQ100_m breach 16,000?

Buckle up, strap yourselves in and get ready for a gargantuan week of central bank meetings and major data points, plus earnings from some of the biggest companies on the planet:

 

Monday, July 24

• JPY: Japan July PMIs
• EUR: Eurozone July PMIs
• GBP: UK July PMIs
• USD: US July PMIs
• Nasdaq “special rebalancing”

 

Tuesday, July 25

• EUR: Germany IFO business climate
• USD: US July consumer confidence
• NDX: Microsoft and Alphabet earnings

 

Wednesday, July 26

• AUD: Australia 2Q CPI
• USD: Fed rate decision
• Meta earnings

 

Thursday, July 27

• CNH: China June industrial profits
• EUR: European Central Bank rate decision
• USD: US 2Q GDP; weekly jobless claims

 

Friday, July 28

• JPY: Bank of Japan rate decision
• AUD: Australia June retail sales
• EUR: Germany July CPI; Eurozone July consumer and economic confidence
• USD: US June PCE deflator, personal income and spending
• CAD: Canada May GDP

 

The week kicks off with a “special rebalancing” for the Nasdaq 100, which is the underlying index that’s tracked by the NQ100_m.

The index-provider, Nasdaq, is set to slash the weightage of its seven largest constituents (Tesla, Google, Microsoft, Apple, Nvidia, Amazon & Meta) from 55.1% down to 43.7% on Monday.

In turn, this rearrangement might give a share price boost to other, less heavy companies in the index such as Starbucks, Mondelez International, Booking Holdings, Gilead Sciences, Intuitive Surgical, Analog Devices & Automatic Data Processing.

As funds worth hundreds of billions of US dollars shift their allocations to mirror the new weightings, that may trigger significant volatility for the Nasdaq 100 index.

 

Central bank watch

As temperatures around the world pick up, the intense heat is now on policymakers from three of the biggest G10 central banks (Fed, ECB, BoJ) to direct markets over the next month or so.

The key calendar event will be on the mid-week FOMC meeting.

Fed is expected to raise the upper bound of its benchmark interest rates up to 5.50% from the current 5.25%.

The wider market is guided by the idea of it to be the last increase, even though

• If the Fed leaves the door wide open to further rate hikes, that could prompt a shudder through risk assets, including the NQ100_m.
   
• On the other hand, if the Fed Chair Jerome Powell leans in to market expectations that peak US interest rates will be achieved after this week, that could send a risk-on wave coursing through global financial markets, likely to the benefit of NQ100_m bulls (those hoping prices could go higher).

 

Big Tech earnings

Alphabet, Microsoft and Meta are due to release their respective Q2 results, noting that these three companies have a combined market cap of about US$ 4.7 trillion.

Note that Big Tech stocks has been one of the major drivers of the overall market growth so far this year, driven by the AI-mania, and has confounded many stock market doomsters with the outsized gains seen already this year.

Hence, the market’s collective response to these earnings results out of Alphabet, Microsoft and Meta in the coming days may sway the broader NQ100_m.

 

Where to next for NQ100_m?

For NQ100_m bulls, the psychologically-important 16,000 is the obvious target in the case of a risk-on scenario.

To the downside, should the Fed’s policy signals, Big Tech earnings, as well as post-rebalancing price action force an unwinding of recent gains, NQ100_m bears may re-test the 15,300 region for support.

Should that 15,300 region fail to hold, noting that’s where recent cycle highs as well as the 21-day simple moving average (SMA) currently reside, then the previous cycle low at 14,933.8 may offer stronger support, noting that would mark a drop of over 3%.