Nasdaq 100 Forecast: NDX slips ahead of Fed Chair Warsh’s speech

US futures        

Dow futures 0.13%, S&P futures 0.18%  & Nasdaq futures  -0.18%

European futures

FTSE 0.09%,  DAX  0.67%

• US stocks mixed ahead of Fed Chair Warsh’s speech
• Markets brace for signals regarding the Fed’s outlook for rates
• Oil steady but falls across the week

U.S. stocks ease as markets wait for Warsh

U.S. stocks are edging lower on Friday, giving back some of yesterday's gains after Nvidia's strong outlook revived the tech trade. The focus has now shifted firmly to Fed Chair Kevin Warsh's Jackson Hole speech, with investors looking for more clarity on the outlook for interest rates.

Warsh's speech is important for two reasons. It is his first major Jackson Hole address as Fed Chair, but it also comes as he tries to change how the Fed communicates with markets. His preference for limited forward guidance has already created some uncertainty, particularly after the latest Fed meeting, when he reiterated the 2% inflation target without giving much indication of how policymakers intend to get inflation there.

The inflation backdrop gives Warsh a reason to lean hawkish. PCE inflation has remained above the Fed's target for 65 consecutive months, while the latest figures were slightly hotter than expected.

The market is currently pricing around a 35% chance of a September rate hike and 75% by December. That leaves plenty of room for today's speech to move markets.

A hawkish message would likely push Treasury yields and the dollar higher, creating another headwind for equities. A more neutral stance would allow markets to focus on the stronger growth and earnings backdrop, particularly after Nvidia's results.

There is also the question of the Treasury's intervention in the bond market. The decision to increase long-term Treasury buybacks has helped contain yields, but investors will be watching whether this creates any tension with the Fed's approach to monetary policy.

Corporate Movers

PayPal is down 16% after reports that Advent and Stripe have decided not to pursue a potential deal for the payments company.

Gap is up 15% after announcing Michael Francis as the new head of Old Navy. Q2 adjusted earnings also beat expectations.

Marvell Technology is down 8% after giving current-quarter adjusted earnings guidance of around $1.10 per share, plus or minus five cents, although the full analyst consensus wasn't provided in the note.

Nasdaq 100 forecast – technical analysis

The Nasdaq 100 is consolidating below 30,000, with a series of lower highs suggesting that momentum has weakened. However, support around 29,000 has so far held, keeping the broader bullish structure intact.

Buyers need to reclaim 30,000 and break above 30,300, the July high, to strengthen the upside case. Above here, attention turns to 30,750 and fresh record highs.

A break below 29,000 would weaken the near-term outlook and expose 28,200, followed by the 200 EMA around 27,300.

FX Markets – Dollar firms ahead of Warsh

The U.S. dollar is edging higher as investors wait for Warsh's speech. Other Fed officials have struck a relatively hawkish tone at Jackson Hole, particularly around inflation, but the dollar has barely reacted. The focus is clearly on what Warsh says.

EUR/USD has fallen below 1.1650 and is on track for a 0.3% weekly decline after gaining around 2.5% over the previous four weeks. The euro remains supported by expectations of another ECB hike in September as inflation pressures persist. French CPI accelerated to 2.4%, while Spanish inflation jumped to 4.3%, with higher oil and fuel prices adding to price pressures.

GBP/USD is holding below 1.36 as the dollar strengthens. Sterling is receiving some support from improving UK business confidence, with the Lloyds business confidence index showing its strongest reading since March.

Oil falls across the week on Middle East diplomacy hopes

Oil prices are holding steady on Friday but remain around 5% lower this week as traders continue to assess the prospect of a diplomatic solution in the Middle East and the impact on crude flows through the Strait of Hormuz.

The decline suggests that some of the geopolitical risk premium has been removed as attention shifts towards diplomatic and economic measures rather than further military escalation.

Shipping data also points to some improvement. Around 15 commodity vessels are now transiting the Strait on a 10-day average, while Goldman Sachs estimates total Gulf exports at around 15-16 million barrels per day.

That's still around 7-8 million barrels below pre-war levels, but significantly above the lows seen during the worst disruption.

For oil, the next move will depend heavily on whether those flows continue to recover. A sustained increase in traffic through the Strait would give the market more confidence that the supply disruption is easing, while any renewed escalation could quickly put the risk premium back into crude.