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The trading week is getting underway with renewed bullish momentum across Nasdaq. This is reflected in today's session, where the index has gained more than 2.5%, highlighting a buying bias that has not been observed with this level of strength in several weeks.
Lower oil prices, semiconductor strength and improving technical momentum are helping Nasdaq futures overcome a hostile backdrop of higher Treasury yields and a stronger US dollar.
US index futures and European markets were struggling to stay afloat after a weaker handover from Asia overnight, ahead of an eventful second half of the week. Rising oil prices and elevated bond yields were once again weighing on investor sentiment, keeping mild pressure on all sorts of risk assets.
US equities extended their gains after the open with the major indices managing a modest recovery yesterday. At the time of writing, the Nasdaq 100 was up 1% and leading the pack. Despite the gains, it is difficult to read too much into the move. The underlying backdrop remains challenging. Many of the existing risks that have unsettled markets recently are still firmly in place.
Over recent trading sessions, the Nasdaq 100 has continued to display an increasingly evident lack of direction in the short term. This can be seen in recent price action, as the index has recorded a move of just over 1.00% on average over the last four trading sessions, highlighting a period of neutrality that continues to limit a clearer directional move.
Much of this week’s attention has been on Nvidia’s earnings, and the chipmaker delivered the sort of numbers of investors had been hoping for. US index futures initially wobbled before moving higher overnight, with the results providing a fresh lift to the AI trade
Trading conditions remain challenging for Nasdaq 100. Over the past five trading sessions, the index has declined by nearly 3.2%, reinforcing a meaningful bearish bias in the short term. Selling pressure has persisted even after the release of the Federal Reserve's minutes, while bond market yields continue to trade at elevated levels.
This week, we have seen further warning signs emerge from crude oil and bond markets. Equity investors have finally started to respond by going a bit defensive. The Nasdaq 100 was down about 1.5% today, with other US indices and European markets also lower. The overcrowed AI trade is losing momentum as yields press higher.
