Nasdaq 100 Forecast: QQQ rises after NFP smashes expectations

US futures

Dow future 0.5% at 42213

S&P futures 0.74% at 5740

Nasdaq futures 1% at 19998

In Europe

FTSE 0.15% at 8288

Dax 0.69% at 19109

• Stocks rise after NFP beats expectations
• US NFP saw 254k jobs added in September
• Unemployment falls to 4.1%
• Oil rises almost 10% this week. on Middle East worries

Stocks rise after NFP beats expectations

U.S. stocks are charging higher after the US nonfarm payroll report came in much stronger than expected, easing any lingering concerns about the health of the US economy.

US NFP saw 254K jobs added in September following an upwardly revised 72k advance in the previous two months. Meanwhile, the unemployment rate slipped to 4.1%, down from 4.2%, and hourly earnings increased by 0.4%, above estimates of 0.3%.

This data, combined with data earlier in the week, shows that the demand for workers is still healthy, calming any concerns that the labour market is cooling too quickly. It will also boost expectations that the Federal Reserve will cut interest rates by 25 basis points next month rather than the 50 basis point rate cut that was expected at the end of last week.

The jobs data combined with ISM services PMI yesterday suggests that there are few signs of a hard landing in the US. Whilst the Fed has said they are comfortable the inflation is cooling towards the 2% target, a stronger economy may make the Fed’s job more challenging.

Even so, attention will turn to next week, when US inflation data is expected to show that CPI is at 2.3%, which would also support the view that the Fed is set to cut rates in November.

The prospect of further rate cuts and resilient labour market data is sending US stocks higher. However, the stronger USD is pulling Gold.

Corporate news

Rivian is set to open 9% lower after the EV manufacturer slashed their full-year production forecasts and delivered fewer vehicles in Q3 than expected amid supply chain issues.

Abercrombie and Fitch is set to open over 2% higher after JP Morgan added the clothes retailer to its positive catalyst list amid increased earnings and revenue growth expectations.

Spirit Airlines is set to slump 37% on reports that the carrier's attempts to restructure its debt and avoid bankruptcy have run into trouble after talks with bondholders failed to result in a deal.

Nasdaq 100 forecast – technical analysis.

The Nasdaq 100 has rebounded from 19500 and is rebounding higher towards 20,315, the September high; a rise above here could bring 20,750 into focus. A break below 19,500 exposes the 19,000 round number, and below here is the 200 SMA at 18550.

FX markets – USD rises, EUR/USD rises

USD is rising after non-farm payroll reports that came in stronger than expected. The U.S. dollar index is on track to rise 2% this week as the strong data & Fed chair Powell’s speech earlier in the week dialed down outsized rate cut expectations and on safe-haven flows.

EUR/USD is falling amid a stronger USD and is set to fall over 1% across the week on expectations that the ECB will cut interest rates by 25 basis points in October after inflation fell below the ECB's 2% target for the first time in three years.

GBP/USD is falling despite Bank of England chief economist Huw Pill's warning about cutting interest rates too fast. His comments came after Bank of England governor Andrew Bailey said yesterday that the central bank could become more aggressive with its rate cuts, sending GBP USD to a two-week low.

Oil rises almost 10% this week

Oil prices are rising over 1.5% on Friday and are set to gain just shy of 10% this week as Middle East concerns ramp up. The market is increasingly concerned that Israel may retaliate with an attack on Iran's oil infrastructure in the coming days after Iran launched its largest-ever assault on Israel on Tuesday.

Still, the gains have been limited by expectations that OPEC's spare production capacity could cover Iran’s shortfall. And the fact that global crude oil supplies have yet to be disrupted by Middle Eastern unrest means that the risk premium is also limited so far.

Meanwhile, Libya's eastern government announced the reopening of all its oil fields following a dispute over the central bank's leadership. Oil output is expected to be restored at 1.2 million barrels per day.

Attention is now turning to the US nonfarm payroll for further clues about the health of the US economy. Upbeat data could help lift oil prices further.