NASDAQ on the Rise, Earnings Season Uncertainty Looms

So far this week, the US Dollar has declined for two consecutive days bringing the US Dollar Index below 102.40. However, the index, which measures the value of the Dollar against six currencies, has significantly increased. The Index is up 0.23% since the daily market opened and is attempting to establish itself above 102.70. Other safe haven assets, including Treasury Bonds and Gold, have come under pressure after sentiment improved on Wednesday. Global equity futures point upwards as things stand, and Asian indices aim to close almost 2% higher. The NASDAQ is also rising, which we will look at below.

Sentiment has partially improved as Sergio Ermotti returns to UBS and will now oversee the Credit Sussie takeover. The move looks to restrict the contamination within the global banking sectors. Investors will be scrutinizing Mr. Ermotti’s first press conference later this morning. The new CEO’s comments, tone, and forward guidance can significantly impact global banking stocks and investor sentiment in general. 

Gold 

The price of Gold this morning has come under significant pressure as the US Dollar Index rises. Gold’s daily decline is currently measuring 0.68% and has declined for nine consecutive hours without forming any bullish price movement. Indicators and price action now indicate a downward trend and possibly create a full correction down to $1,948 or $1,943. However, traders are cautious about their entry as the asset has not formed a retracement this morning, and retracements are known to form between sessions. 

XAU/USD 1-Hour Chart on March 29th

The price of Gold remains significantly higher than in February and March as the liquidity within the banking sector remains a risk for investors. The Federal Reserve and the Governor took part in an open hearing last night. Governor Philip Jefferson advised depositors to move their capital from smaller banks to larger competitors. He advised this can have a negative effect on the economy as many small to medium Businesses rely on smaller regional lenders. 

However, the sentiment in the market has risen and may continue to rise while each week sees no further signs of a crisis. The US last night released their CB Consumer Confidence which read 104.2. This is higher than the expected 101.00 and the previous month, which read 103.4. This is known to be harmful to Gold as a safe haven and an inversely correlated asset with the Dollar. 

No major news is expected to affect the price of Gold this morning other than Mr. Ermotti’s first press conference as CEO of UBS. Tomorrow investors will be monitoring the US’s final Gross Domestic Product, which investors expect to read 2.7%. Gold may be supported in the short term if the GDP figure is lower than expected. 

NASDAQ - Earnings Uncertainty Looms

The NASDAQ shows strong bullish price movement throughout this morning’s Futures market. The index opened on a slight bullish price gap and grew a further 0.70% during this morning’s Asian Session. The index has been experiencing a reverting market since reaching a yearly high on March 22nd, traders should be vigilant of volatility and the price direction.

NASDAQ 2-Hour Chart on March 29th 

This week the market will primarily focus on two major economic releases. The US’s GDP figures and Friday’s PCE Price Index are also known to be the most analysed index by the Federal Reserve. The PCE Price Index is specifically important as it focuses on a fixed basket such as the CPI but instead looks at inflation on what consumers buy. 

Any sign of increasing or resilient inflation can pressure the NASDAQ as it may point to a further interest rate hike. Suppose inflation tempts the Federal Reserve again to increase the Federal Fund Rate. In that case, the monetary policy will pressure the banking sector and the economy, which is already struggling. 

Investors will soon focus on the next earning season, beginning in mid-April. All earnings will influence the NASDAQ, even companies not an index component. This is because general company performance can affect investor sentiment and stock market performance. However, the NASDAQ will largely be influenced by technology companies and components of the index. 

Investors are unsure about how companies will perform within the next quarter. Consumer confidence and demand have been indicated as healthy over the past three months, but of course, there has been plenty of pressure from high-interest rates. Investors are leaning slightly towards a poor earnings season after analysts at Morgan Stanley are advising the figures within the previous quarter's reports are greatly overstating profits and the second quarter may be significantly lower. However, this cannot be certain until the reports are made public. 

Technical analysis this morning is pointing towards an upward trend in the ultra-short term. The main moving averages, the Bollinger bands and the Stochastic Oscillator, point upwards. The Ichimoku Trading Clouds is above the current price, which is not pointing towards a bullish trend, and there is a clear resistance level at $12,849. Therefore, investors may largely keep trades short-term and place high importance on price action analysis. 

Summary: 

• Sentiment has partially improved as Sergio Ermotti returns to UBS and will now oversee the Credit Suisse takeover.
• Gold’s daily decline is currently measuring 0.68% and has declined for nine consecutive hours without forming any bullish price movement.
• Markets expect tomorrow’s GDP data and Friday’s PCE Price Index to influence Gold and the NASDAQ. 
• Investors will start focusing on the upcoming earning season. Analysts are advising the reports were greatly overestimating profits and the second quarter may be significantly lower.