- All global indices trade lower during Tuesday’s Asian and European Sessions.
- The VIX adds 2.30% throughout the day and US Bond Yields rise 15 points indicating a lower risk sentiment.
- Investors turn their attention to the US Presidential Debate which will take place today after the US stock market closes.
- Tomorrow’s US inflation rate will play a crucial role in shaping stock market prices.
NASDAQ (USA100) – Will Investors Buy The Dip?
The NASDAQ fell 0.76% during this morning’s Asian session but attempts a correction as the US session edges closer. Nonetheless, even with the attempted correction the price of the index trades 0.29% lower. Markets use the VIX index to determine the market sentiment towards the stock market. Currently, the VIX trades 1.50% higher which is an improvement compared to earlier in the day. Nonetheless, the higher VIX price can be negative for the stock market. If the VIX again increases above 2.00% some investors may deem this as a bearish signal.
Investors are closely watching forecasts regarding the US Fed’s next steps in its monetary policy. According to the CME FedWatch, there is a 71% chance of a 25 basis point rate cut at the September meeting, while the likelihood of a 50 basis point cut stands at just 29%. Previously, investors were pricing in a 50-basis point hike, hence why the price has again come under pressure. Analysts have recently revised their outlook, now predicting a more gradual rate adjustment. This appears to be largely factored into current market prices and is expected to have minimal impact on Dollar asset dynamics.
However, investors should note the price of the index and the pricing will depend on tomorrow’s Consumer Price Index. The CPI (Consumer Price Index) will determine whether the Fed will definitely opt for a 0.25% cut or if they would consider a larger cut. Analysts expect the US inflation rate to fall from 2.9% to 2.6%. If the price falls to the predicted 2.6% or below, experts believe this will deem positive for the index. However, if the price fails to fall as expected, the index may remain under pressure.
In terms of technical analysis, the price on the 2-hour chart continues to trade below the trend-line and the 100-Period Moving Average. In addition to this, the index remains below the 50.00 level on the RSI. However, investors need to consider whether the price will rebound now that investors can purchase at a 7% discount and as interest rate cuts are forthcoming.
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Michalis Efthymiou
Market Analyst
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