Nasdaq 100 Forecast: NDX rises further with Middle East developments in focus

US futures        

Dow futures 0.20% S&P 500 futures 0.17%  & Nasdaq futures  0.26%

European futures

FTSE 0.18%,  DAX  0.58%

• US stocks extend gains towards record highs
• Optimism surrounding US-Iran talks pulls oil & yields lower
• Meta steadies after jumping 11% yesterday
• Oil falls to a 2-week low on diplomatic hopes & Saudi exports

Stocks rise further as oil and Treasury yields fall

U.S. stocks are heading for a modestly stronger start as investors awaited developments over potential talks between the U.S. and Iran.

Comments by senior Iranian officials that Tehran could reopen the Strait of Hormuz within seven days if the U.S. eases military pressure have helped pull oil prices lower.

Falling oil prices have helped ease inflation concerns, with the benchmark 10-year Treasury yield down to around 4.9%, continuing to pull back from a 19-year high earlier this month.

Oil prices are very much the key variable here. Falling oil prices ease inflation concerns and pull Treasury yields lower, improving demand for equities and other risk assets.

U.S.-Iran talks could take place on the sidelines of this week's U.N. General Assembly meeting in New York, although no formal meeting has been confirmed. This would then be followed by the U.S.-China summit on Thursday.

Federal Reserve policymakers will also be in focus, with traders pricing in a 53% chance that the Fed will hike rates by 25 basis points in October, following this month's hike.

Remarks from Fed Vice Chair Philip Jefferson, New York Fed President John Williams and Richmond Fed President Thomas Barkin are expected today.

Corporate Movers

Alibaba is trading over 3% higher after CEO Eddie Wu said Alibaba Cloud plans to operate more than 20 GW of data centres globally by 2032.

Meta will remain in focus after rallying 11% in the previous session and gaining more than 34% over the past month. The surge in Meta comes after its Muse AI personal assistant became the most downloaded free app on Apple's App Store.

Meta is being repriced as an AI leader, with Muse Agent helping users with everything from ordering groceries to planning their social lives.

Nasdaq Forecast – Technical Analysis

The Nasdaq broke out above its falling trendline resistance and the July high to reach 30,600, within a whisker of the 30,750 record high. Buyers, supported by momentum, will look to extend gains above 30,750 to fresh record highs.

On the downside, immediate support is seen at 30,050, the July peak. Below here, 30,000 comes into focus, where the falling trendline and round number converge.

It would take a break below 28,900, the lower bound of the recent range, for the outlook to turn more bearish.

FX Markets – Dollar rises, GBP/USD falls

The USD is modestly higher at a seven-week peak after the Federal Reserve hiked interest rates last week and on expectations of further rate hikes. Fed speakers this week have so far supported the need for further tightening to rein in inflation. More hawkish commentary could push the U.S. dollar higher.

EUR/USD has fallen to a seven-week low as German political uncertainty offsets the broader risk-on mood. There is growing uncertainty in Germany following the CDU's defeat in the weekend state elections, while rising French government debt is adding further pressure to the euro.

GBP/USD is under pressure around a six-week low after UK government borrowing exceeded expectations in August, pushing the deficit for the financial year further above forecasts. Public sector net borrowing stood at £18.3 billion in August, ahead of the roughly £15.5 billion forecast. This adds pressure on Chancellor John Healey ahead of the October 28 Budget.

Oil falls to a two-week low

Oil prices have dropped to a two-week low on the prospect of increased supplies from the Gulf and after Iran signalled it could reopen the Strait of Hormuz within seven days.

Brent has fallen below $100 a barrel and WTI below $95, with both contracts reaching their lowest levels since September 8.

Optimism over a diplomatic solution to the Middle East conflict is rising after Iran said it could reopen the Strait of Hormuz within seven days if the U.S. eases military pressure and lifts its blockade on Iranian ports.

Attention is now focused on the Iranian delegation at the U.N. General Assembly in New York, with reports that Tehran has given its delegation authority to revive diplomacy with the U.S.

Oil prices are therefore increasingly being driven by the prospect of a supply recovery. Saudi Arabia has also increased crude shipments through the Strait of Hormuz after attacks forced it to halt some shipments through the East-West pipeline.

Oil has fallen sharply over the past week. The market may now need to see a sustained increase in supply through the Strait of Hormuz before prices can move materially lower from here.