Where we are: Nasdaq futures are currently trading at 27431.25, up 0.14% on the session, having traded in a tight 27345.75-27541.00 range overnight. This sits just below the upper end of that range, and implies a slightly softer open for the cash market which closed Friday near all-time highs. Despite the modest overnight move, the cash Nasdaq 100 closed at 24836.60 on Friday, a substantial 0.89% gain on the day.
What’s driving it: Optimism surrounding potential energy export resumption from the Middle East, as suggested by reports of Iran being open to negotiations, is helping to underpin risk sentiment despite a lack of tangible progress. The broader tech sector also continues to benefit from the AI narrative, especially in light of Qualcomm’s collaboration with OpenAI and Meditek. While the DXY is weaker at 98.14, the US 10-year yield is firming slightly, now at 4.323%, showing some resilience in the face of broader risk-on sentiment.
- Yahoo Finance: Qualcomm stock soars, Nvidia tops $5 trillion again, with Big Tech Q1 updates on deck
- Reports indicate that Iran is open to allow vessels to cross the Strait of Hormuz should the US lift its blockade, potentially paving the way for the return of tanker exports from the region.
- CFTC data shows net non-commercial positions in the Nasdaq 100 modestly long but near the 4th percentile, suggesting room for further long accumulation, and limited downside pressure from positioning if sentiment were to sour.
NY session focus: Look for initial direction from the open, and how the cash market reacts to Friday’s close. The main event to watch is any headlines related to Big Tech Q1 earnings, due mid-week. Key levels to monitor are 27500 in the futures for a test of resistance, and 27345 as initial support. The trade that’s working remains buying dips in the tech sector, while the at-risk trade is shorting tech given the persistent bullish narrative and relatively light positioning. The pain trade here is a sudden risk-off move driven by geopolitical flare-ups, catching complacent longs off guard and leading to a swift correction.