This is a data-heavy week, with markets anticipating monetary policy decisions by three major central banks, with the US Fed kicking things off on Wednesday. Markets expect another moderation in the pace of tightening, as CME’s FedWatch Tool projects a small 25 basis points rate increase.
Policymakers refrained from any meaningful pushback against this market pricing, while some of them embraced it. However, the Fed has maintained its hawkish stance and could signal more moves ahead, as the December Summary of Economic Projections suggests a median terminal rate of 5.1%.
Investors also keenly await a series of earnings reports from tech heavyweights, mainly Meta Platforms, Apple, Amazon.com and Alphabet, which along with Netflix, are often referred to as the FAANG group. The performance of their advertisement segments and cloud business will be some of the focal points.
Broader sentiment is not good today, despite upbeat data from China and upgraded growth forecasts from the International Monetary Fund, as investors appear cautious ahead of the upcoming key events, that can spur volatility and determine the trajectory of NAS100.
The tech-heavy index is now vulnerable to the EMA200, but the broader 11,500-11,300 area provides a strong support base that can contain further pressure. Daily closes below it would pause the upside momentum and create scope for sub-11,000 moves, but this would require a surprise by the Fed.
However, NAS100 started the week with three-month highs (12,253) and heads towards a profitable month. Above the EMA200, risk is clearly on the upside and bulls have the ability to set higher highs, but 12,883 looks distant for now.
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