Category: Indexes

  • Nasdaq 100 Vulnerable as Positioning Nears Crowded Levels – Tuesday, 2 June

    Where we are: Nasdaq 100 futures are currently trading at 30551.75, up a meager 0.03% on the day, holding the overnight bid. The overnight range has been tight, between 30318.50 and 30584.75, capping out yesterday’s cash high, which peaked at 27190.21. Given the narrow range and proximity to the overnight high, a break above 30585 would signal a potential test of higher levels.

    What’s driving it: A mild risk-off tone is percolating through US futures ahead of the New York open, driven by lingering geopolitical tensions and some skepticism around AI spending. US yields are slightly lower, with the 10-year at 4.432% and the 2-year at 4.031%, reflecting a flight to safety but DXY is also softer, indicating a mixed sentiment. Recent wire news indicates that bullish positioning in US tech stocks, including those heavily weighted in the Nasdaq 100, is at risk of correction according to Citi analysts.

    • The JOLTS Job Openings report at 10:00 ET is the main macro focus today; a miss could exacerbate tech selling.
    • Convertible bond issuance is surging as investors embrace zero-interest debt for options on high-growth tech stocks, signaling froth in the market.
    • Speculator positioning in Nasdaq 100 futures is crowded short at the 2th percentile, suggesting a potential squeeze risk on any positive surprises.

    NY session focus: The JOLTS number at 10:00 ET will be closely watched for signs of labor market weakness. A break below 30300 in Nasdaq futures would suggest further downside, potentially targeting 30000. Conversely, a strong push above 30600 could trigger a short squeeze, given the crowded short positioning. The trade that is working is fading the rallies, but the risk is a squeeze rips the bears out before the data even hits. The pain trade for Nasdaq 100 is a strong JOLTS beat, coupled with a de-escalation of geopolitical risks, triggering a massive short squeeze and a retest of recent highs.

  • Dow Jones Bulls Face Resistance After Strong Run – Tuesday, 2 June

    Where we are: Dow futures are currently trading at 50893, down 179 points or 0.35% on the day. The overnight range has been relatively contained between 50871 and 51083. This puts the Dow futures below yesterday’s cash close of 51079, suggesting a slightly weaker open for the New York session. The cash index is trading above the intra-day low of 50767, suggesting this may be initial support.

    What’s driving it: The Dow is seeing some pullback following a strong run, with profit-taking likely in play ahead of potentially volatile economic data. We see a risk of downside surprise in this morning’s JOLTS data and think this may cause a risk-off move. Despite generally positive sentiment in Asia, where the Nikkei gained 0.16%, the mixed picture in Europe is a negative sign. A moderately short speculator positioning for the Dow, -9,324 contracts net, presents a squeeze risk if the market turns higher, but that feels remote right now.

    • US 10Y yields are slightly lower at 4.432%, indicating some risk aversion.
    • The DXY is also slightly lower at 99.05, providing limited support to the index.
    • Nvidia’s move into the PC chip market is weighing on sentiment in other tech stocks like AMD and Intel, even as the Nasdaq remains buoyant.

    NY session focus: Keep an eye on the 10:00 ET release of the JOLTS Job Openings figure, as a deviation from the forecast of 6.87M could trigger a significant market reaction. We are watching the 50767 cash level as a key support — a break below that could open the door for further downside towards 50500. The trade that has been working recently is long tech, but that feels stretched and vulnerable, especially if broader sentiment sours. The pain trade for the Dow would be a strong upside surprise in JOLTS, triggering a short squeeze that sends the index back above 51,000 quickly.

  • FTSE 100 Grinds Higher Despite Gilts; Bailey Looms – Tuesday, 2 June

    Where we are: The FTSE 100 is currently trading at 23358, up 110 points or +0.47% on the day. The index has traded in a range of 23248-23494 thus far. This level is modestly higher than yesterday’s close, driven by continued strength from miners. Resistance is seen at the intraday high of 23494.

    What’s driving it: UK CPI data released last month showed a significant drop in inflation, with headline CPI falling to 2.8%. This, alongside a slight rise in unemployment to 5%, is easing pressure on the Bank of England to maintain its hawkish stance. UK 10-year Gilts have edged down 5bp to 4.830%, while the 2-year yield remains unchanged at 4.274%, steepening the 2s10s curve to +56bp. The weakening in Gilts is not weighing on the FTSE, with commodity strength providing a buffer, although Gov Bailey’s speech at 15:00 London could trigger a reaction.

    • The 0.5% drop in UK CPI YoY in April, along with a 0.7% drop in Core CPI YoY, signals easing inflationary pressures and potentially reduces the urgency for further rate hikes.
    • The rise in UK unemployment to 5% suggests a softening labor market, further supporting a more dovish outlook.
    • Despite the positive move in FTSE, British American Tobacco is down over 3%, diverging from the broader index and indicating sector-specific weakness.

    NY session focus: Traders should watch for further developments regarding BoE Governor Bailey’s speech at 15:00 London, as his remarks could significantly impact both Sterling and the FTSE 100. Key levels to watch are resistance at 23494 and support around 23248. S&P 500 futures trading slightly lower (-0.14%) pre-NY open suggest a mildly risk-off tone which could limit further upside for the FTSE. The trade working is still riding the commodity strength, but is vulnerable to a hawkish Bailey surprise. The pain trade is a sharp dovish repricing in the UK curve combined with a weaker pound which pressures domestically focussed names.

  • Nikkei 225 Remains Resilient Despite Geopolitical Concerns – Tuesday, 2 June

    Snapshot: The Nikkei 225 is trading at 66734, up 0.16% on the day. JGB yields are sharply lower, with the 10-year down 12bp to 2.569%, supporting equities. Today’s moves are happening amidst lingering uncertainty about BOJ policy.

    • Watch for a break above intraday highs of 66734.
    • Risk: Middle East tensions and potential impact on energy prices continue to be a factor.

    Bias into NY: The Nikkei 225 is expected to consolidate recent gains, though further JGB yield compression could provide additional upside. The US 10-year yield at 4.432% is providing some support.

  • DAX Treads Water Amid Mixed Data – Tuesday, 2 June

    Snapshot: The DAX is currently trading at 25164, down 31 points, weighed by slightly disappointing HICP prints, which at 3.2% and 2.4% respectively were roughly in line or slightly above expectations. Traders will be watching for reactions to the US data later this morning.

    • The DE 2Y Schatz is holding steady at 2.604%, suggesting limited immediate reaction to the HICP figures.
    • Focus shifts to US macro sentiment with a possible downside catalyst if US yields reverse course.

    Bias into NY: Neutral-to-slightly bearish. The lack of strong positive momentum in the face of firming Bund yields suggests limited upside in the near term, with the index vulnerable to a further slide towards 25,000 if US data disappoints.

  • Dow Momentum Continues as Tech Sector Drives Gains – Monday, 1 June

    Where we are: The Dow Jones cash index is currently trading at 51033, up 259 points on the day. Futures are a touch firmer at 51246, up 197 points, having traded in a range between 50999 and 51382. The index is building on Friday’s gains and continues to push higher, buoyed by strong tech sentiment.

    What’s driving it: The primary driver remains strength in the tech sector. Nvidia’s announcement of its new RTX Spark Superchip has injected further momentum into the market. Rising US yields are also supporting gains, though modestly, with the 10-year at 4.450%.

    • Powell’s acceptance speech at the John F. Kennedy Library Foundation earlier provided a backdrop of steady confidence regarding future economic resilience.
    • Net non-commercial positioning in Dow futures is moderately short, at -9,324 contracts.
    • The VIX remains subdued at 15.74, indicating continued risk-on sentiment.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI, forecast at 53.3, and ISM Manufacturing Prices, forecast at 85.3. Watch for a break above the intraday high of 51382 in the Dow futures to confirm bullish momentum. A failure to sustain gains above 51000 could signal a near-term pullback. Later, at 20:30 ET, traders will digest any market-relevant comments from FOMC Member Powell. The trade that’s working is buying the dip on tech names. The trade at risk is shorting tech into continued positive news flow. The pain trade is a sharp reversal driven by hotter-than-expected inflation figures in the ISM Manufacturing Prices.

  • NY Session Tactical Brief – Monday, 1 June

    Regime: Risk-on, supported by easing global inflation expectations as indicated by lower US 10Y yields and firm equities futures.

    Today’s market themes:

    • ISM Day: US ISM Manufacturing PMI key for near-term Fed rate path signals.
    • USD strength: DXY gains traction amid mixed global growth outlook, impacting emerging market stocks.
    • Oil price volatility: Geopolitical tensions and supply concerns continue to underpin oil prices.

    The setup: ISM Manufacturing PMI at 10:00 ET will be crucial in determining the near-term Fed outlook. A print above 53.3 could fuel further DXY gains and pressure risk assets, while a miss could see yields dip and equity futures rally. Watch US 10Y around 4.45%.

    Watch list (native time per event):

    • 10:00 ET USD: ISM Manufacturing PMI (forecast 53.3, prior 52.7)
    • 10:00 ET USD: ISM Manufacturing Prices (forecast 85.3, prior 84.6)
    • 20:30 ET USD: FOMC Member Powell Speaks

    Bias by asset:

    • DXY:
      • Direction: Higher.
      • Domestic (US): ISM data crucial; Fed rhetoric leaning hawkish.
      • Cross: Risk-off flows supportive; EUR/GBP weakness adds to momentum.
      • Levels: Resistance 99.20, Support 98.80.
    • EUR/USD:
      • Direction: Lower.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength weighs; US-DE 10Y widening pressures.
      • Levels: Resistance 1.1670, Support 1.1630.
    • GBP/USD (Cable):
      • Direction: Neutral to slightly lower.
      • Domestic (UK): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength a headwind; US-UK 10Y supportive.
      • Levels: Resistance 1.3480, Support 1.3440.
    • USD/JPY:
      • Direction: Higher.
      • Domestic (JP): BoJ still slow to tighten; intervention risks persist.
      • Cross: US 10Y driving force; DXY strength adds to upward pressure.
      • Levels: Resistance 159.75, Support 159.20.
    • USD/CAD (Loonie):
      • Direction: Higher.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength dominating; US-CA 10Y favors USD upside.
      • Levels: Resistance 1.3850, Support 1.3790.
    • AUD/USD (Aussie):
      • Direction: Lower.
      • Domestic (AU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; China growth concerns remain.
      • Levels: Resistance 0.7190, Support 0.7150.
    • NZD/USD (Kiwi):
      • Direction: Lower.
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; risk-off sentiment hurting commodity currencies.
      • Levels: Resistance 0.5990, Support 0.5940.
    • USD/CHF (Swissy):
      • Direction: Higher.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength; safe-haven demand muted.
      • Levels: Resistance 0.7870, Support 0.7820.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): Mixed, relative CB stance drives direction.
      • Domestic: ECB vs BoE/BoJ expectations key for cross-pair movements.
      • Cross: Overall DXY strength; risk impacting JPY leg most.
      • Levels: Monitor key levels on a case-by-case basis.
    • XAU (Gold):
      • Direction: Lower.
      • Domestic (asset-specific): Real yields rising limits upside.
      • Cross: DXY strength a major headwind.
      • Levels: Resistance 4580, Support 4520.
    • XAG (Silver):
      • Direction: Mixed.
      • Domestic (asset-specific): Industrial demand supportive, but volatile.
      • Cross: DXY strength weighs; risk appetite fluctuates.
      • Levels: Resistance 7660, Support 7420.
    • WTI / Brent:
      • Direction: Higher.
      • Domestic (asset-specific): Geopolitical tensions support; supply concerns.
      • Cross: DXY strength can limit some upside.
      • Levels: WTI Resistance 91.50, Support 88.50.
    • Copper:
      • Direction: Higher.
      • Domestic (asset-specific): China demand concerns still linger despite recent gains.
      • Cross: Dollar strength may temper upside for now.
      • Levels: Resistance 660, Support 640.
    • SPX:
      • Direction: Sideways to slightly higher.
      • Domestic (US): Data-dependent Fed outlook influences direction.
      • Cross: Risk sentiment driving force; watch VIX reaction.
      • Levels: Futures resistance 7630, cash support 7570.
    • NDX:
      • Direction: Sideways.
      • Domestic (US): Earnings season winding down, focus on macro.
      • Cross: Higher rates sensitivity; VIX affecting valuations.
      • Levels: Resistance 30600, Support 30350.
    • US30 (Dow):
      • Direction: Sideways to slightly higher.
      • Domestic (US): Cyclical sectors showing resilience.
      • Cross: Bond yield direction drives sentiment.
      • Levels: Resistance 51400, Support 50700.
    • UK100 (FTSE):
      • Direction: Lower.
      • Domestic (UK): Sterling weakness supportive, but overall global risk weighs.
      • Cross: Heavily affected by general mood across US/global markets.
      • Levels: Resistance 23450, Support 23300.
    • DAX:
      • Direction: Sideways.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech sector; DXY driving some investor sentiment.
      • Levels: Resistance 25350, Support 25100.
    • Nikkei:
      • Direction: Sideways to slightly higher.
      • Domestic (JP): Consolidation around record highs.
      • Cross: US tech; overall risk appetite important for sentiment.
      • Levels: Resistance 67300, Support 66200.
    • BTC:
      • Direction: Sideways to slightly lower.
      • Domestic (asset-specific): ETF flows influence price.
      • Cross: Heavily linked to DXY; sensitive to tech direction.
      • Levels: Resistance 74100, Support 71800.

    Positioning watch: USD is crowded long at 81st percentile, and JPY remains crowded short (0th percentile) presenting squeeze risks on any dovish pivot from the Fed or a BoJ hawkish surprise. Copper and BTC are crowded long as well, both at 94th, suggesting downside risks on weaker data.

    The pain trade: A weaker-than-expected ISM, combined with Powell hinting at openness to rate cuts, would trigger a sharp rally in bonds and equities, squeezing USD longs and JPY shorts simultaneously.

  • S&P 500 Breaks to New Highs on Tech Strength – Monday, 1 June

    Where we are: The S&P 500 futures are currently trading at 7610.00, up 17.25 points, marking a 0.23% gain. The overnight range has been 7585.50-7622.00, with the index currently testing the upper end. Cash S&P sits at 7580.10. This price action extends the rally from Friday, fueled by ongoing strength in the tech sector.

    What’s driving it: The primary driver is renewed optimism in the US tech sector, spurred by positive earnings news and advancements in AI adoption. A moderately short positioning in the S&P 500 (-159,316 contracts) may be exacerbating the move higher. DXY strength to 99.06 is failing to cap the move, while the 10Y yield is little changed at 4.452%.

    • Nvidia’s announcement of its RTX Spark Superchip is driving significant momentum in software and hyperscaler stocks, with Microsoft and Oracle seeing notable gains.
    • A new study highlights Nvidia, Meta, and Schlumberger as leaders in AI adoption among S&P 500 companies, further boosting investor confidence in the sector.
    • The 2s10s spread has widened slightly to 0.47%, reflecting a modestly steeper yield curve, but this has so far failed to dent risk appetite.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI (forecast 53.3) and ISM Manufacturing Prices (forecast 85.3). A strong print could further solidify the rally, while a miss may trigger a pullback. Key levels to watch are 7622.00 as immediate resistance and 7585.50 as intraday support. The trade that’s working is long tech, but the risk is a broader market correction if macro data disappoints and oil prices continue their climb. FOMC Member Powell speaks at 20:30 ET — expect comments on inflation and the economic outlook, but given that it is an acceptance speech, market impact may be limited. The pain trade is a sharp rotation out of tech and into value stocks.

  • Nasdaq 100 Poised for Further Gains on Tech Strength – Monday, 1 June

    Where we are: Nasdaq futures are currently trading at 30456.50, up 0.10% and near the top of the overnight range of 30362.75-30592.25. The cash Nasdaq 100 closed Friday at 26972.62, and the overnight action suggests continued upward momentum. We’re watching the 30600 level in futures as the next key resistance.

    What’s driving it: Strength in tech continues to be the primary driver, amplified by positive sentiment surrounding AI and Nvidia’s latest announcements. With no fresh domestic data yet, the underlying bid is supported by the relatively stable US yield environment, with the 10-year at 4.452% and the 2-year at 4.037%. The slightly weaker dollar, with the DXY at 99.06, is providing a tailwind, but the dominant factor remains the AI-fueled enthusiasm for tech stocks.

    • Powell’s scheduled speech later today, following his acceptance remarks from earlier, could offer further insight into the Fed’s outlook, although it’s unlikely to materially shift the current market narrative.
    • The CFTC data reveals a crowded short positioning in the Nasdaq 100, with net non-commercial positions at -6,085 contracts, sitting in the 2nd percentile on a 52-week lookback. This leaves the index vulnerable to a squeeze if the rally continues.
    • Asian markets showed strong performance overnight, with the Nikkei up 0.92%, providing additional momentum heading into the NY session.

    NY session focus: Keep an eye on the 10:00 ET release of the ISM Manufacturing PMI and Prices Paid data; stronger-than-expected prints could temper the tech rally by reigniting inflation concerns. The key levels to watch are 30600 on the upside and 30360 on the downside. The current trade is long tech, but the risk lies in an unexpected hawkish turn from Powell or a surprisingly strong inflation print. The pain trade would be a sharp reversal in tech sentiment leading to a significant short squeeze in other sectors.

  • Dow Eyes Fresh Record Highs Awaiting ISM – Monday, 1 June

    Where we are: The Dow Jones cash index is currently trading at 51033, up 259 points, or 0.51%, having already probed as high as 51094. Futures are printing 51233, up 184 points. The overnight range saw a low of 50999 and a high of 51382. The Dow continues to build on Friday’s gains, poised to test fresh all-time highs.

    What’s driving it: The underlying bid in US equities continues, supported by positive sentiment from the tech sector detailed in analyst calls, even as broader macro headwinds persist. The 2s10s spread is widening, currently at 0.47%, suggesting some steepening of the curve. With no domestic data prints yet this morning, the tape is likely to continue tracking risk until this morning’s ISM data release. Powell’s planned speech tonight is unlikely to move the dial.

    • The ISM Manufacturing PMI at 10:00 ET is expected to show continued expansion, printing at 53.3 vs a prior of 52.7.
    • ISM Manufacturing Prices, also at 10:00 ET, is expected to edge higher to 85.3 from 84.6, likely adding to inflation concerns.
    • Net non-commercial positioning is moderately short the Dow at -9,324 contracts. A strong bid today could prompt a squeeze.

    NY session focus: All eyes will be on the 10:00 ET release of the ISM Manufacturing PMI and ISM Manufacturing Prices. A stronger-than-expected print on the prices paid component could weigh on risk assets and see the Dow pare gains. Key levels to watch are resistance at the intraday high of 51382 and support at 50999. Long Dow remains the working trade, but is vulnerable to an inflation surprise. Powell speaks again at 20:30 ET. The pain trade here is a sharp risk-off move sparked by unexpected macro tightening, forcing shorts to cover.

  • FTSE Faces Pressure as Disinflation Trend Falters – Monday, 1 June

    Where we are: The FTSE 100 is currently trading at 23377, down 52 points or 0.22% on the day. The index is holding above the lower end of its intraday range of 23352-23429, but is lagging the broader European rally. The Footsie closed its last NY session near 23,400.

    What’s driving it: The FTSE is underperforming its European peers, feeling pressure from a somewhat mixed domestic picture. The latest inflation data, while showing a decrease in headline CPI to 2.8%, may not be enough to inspire confidence that the Bank of England will cut rates aggressively, particularly with unemployment ticking up to 5%. Meanwhile, a firmer dollar, with the DXY at 99.06, adds to the pressure, weighing on the relative value of FTSE-listed multinationals’ overseas earnings.

    • UK CPI printed 2.8% YoY versus a prior of 3.3%, suggesting disinflation is ongoing, albeit more slowly than hoped.
    • The UK unemployment rate edged up to 5%, a potential warning sign for the domestic economy.
    • The FTSE is diverging from the DAX (+0.80%) and CAC 40 (+0.61%), pointing to specific UK-related headwinds.

    NY session focus: The US session will be crucial in determining whether the FTSE can regain some ground. Keep an eye on US 10-year yields, currently at 4.452%, as any further downside pressure could provide a tailwind. The key level to watch on the FTSE is 23350 – a break below could trigger further selling. The trade that’s working is shorting FTSE versus long DAX, while the trade at risk is dip-buying UK housebuilders on the back of the Nationwide data. Watch for the 08:30 ET US data — any surprises could spark volatility across global markets. The pain trade for the FTSE 100 is a sharp reversal in Sterling alongside a renewed global risk-on move.

  • Nikkei 225 Hits New Highs Amid AI Optimism – Monday, 1 June

    Snapshot: The Nikkei 225 is trading at 66934, up 0.92% on the day, reaching a fresh record high. JGB yields are slightly higher, with the 10Y at 2.684%, suggesting continued confidence in the Japanese economic outlook.

    • The Nikkei’s rally is heavily influenced by tech shares benefiting from the global AI infrastructure expansion, with SoftBank Group leading the charge.
    • Watch for any signs of profit-taking after this significant rally; a pullback could be exacerbated by geopolitical tensions in the Middle East.

    Bias into NY: We anticipate continued support for the Nikkei 225 as long as US yields remain contained; look for a test of the 67000 level. DXY strength may act as a slight headwind, but strong domestic momentum should prevail.

  • DAX Momentum Continues on Cooling Inflation – Monday, 1 June

    Snapshot: The DAX is trading at 25298, up 0.80% on the day, buoyed by the recent German HICP print of 2%, a significant drop from the previous 2.6%. This suggests easing inflationary pressures, potentially giving the ECB room to consider future rate cuts.

    • Watch for further upside momentum if the index breaks above the intraday high of 25301.
    • Geopolitical tensions, particularly in the Middle East, remain a risk factor and could trigger a risk-off move.

    Bias into NY: We are cautiously bullish on the DAX into the NY session, driven by the positive inflation data and a relatively stable Bund yield environment; further gains could be capped if the DXY continues its advance above 99.06.

  • Nikkei 225 Rally Looks Sustainable – Monday, 1 June

    Snapshot: The Nikkei 225 is up 0.92% at 66934, driven by continued strength in technology shares as Japanese firms benefit from the global AI boom. Flat capital spending data was shrugged off. Today’s catalyst: Goldman Sachs bullish call.

    • Watch 67231, the intraday high, as a potential breakout level.
    • Geopolitical tensions in the Middle East and their impact on risk sentiment remain a downside risk for the New York session.

    Bias into NY: Bullish. JGB yields are stable, and the Goldman Sachs endorsement should further fuel the AI-driven rally; look for a push above 67231.

  • DAX Rally Extends on Lower German HICP – Monday, 1 June

    Snapshot: The DAX is up 0.60% to 25249, buoyed by the fall in German HICP to 2% from 2.6% previously. The easing of inflationary pressures domestically is supporting risk sentiment.

    • Immediate resistance is the intraday high of 25260.
    • Geopolitical tensions in the Middle East, as referenced by overnight commentary, represent a downside risk and could trigger a reversal.

    Bias into NY: We expect the DAX to hold gains early in the NY session, supported by positive risk sentiment reflected in US futures, S&P 500 futures +0.28%. Watch for any repricing following the US open and incoming data releases later in the week.