Nasdaq Pressured by Inflation, Growth Worries, and Wider Credit Spreads

The Nasdaq experienced a sharp decline last week, as investor sentiment deteriorated following US inflation data that came in above expectations, with anxieties over the economic outlook adding further weight.

Credit spreads are persistently expanding, with credit default swap spreads for AI-focused hyperscalers and data center operators reaching unprecedented levels. At the same time, the Federal Reserve is compelled to maintain a hawkish stance in light of the elevated inflation.

Oil prices likewise keep climbing, as US-Iran talks remain stalled and the Saudi-Houthi conflict continues unabated. In short, downward pressures are accumulating, leaving the stock market appearing increasingly fragile.

The key event in the coming days is likely the US Flash PMIs due on Friday, unless an unexpected development arises in US-Iran negotiations.

Should the numbers come in weak, growth worries would likely intensify, potentially sparking another Nasdaq selloff. Conversely, data exceeding forecasts could fuel a short-lived relief bounce, though it would not alter the broader outlook, as it would merely underscore the case for additional rate hikes.

NASDAQ TECHNICAL ANALYSIS – DAILY TIMEFRAME

The Nasdaq (US100 CFD contract) slipped beneath the major trendline and pushed further into fresh lows as additional sellers entered the market, aiming for the 28,742 mark. Should the price reach this zone, buyers are expected to emerge with a clearly defined risk below the level, positioning for a climb toward new all-time highs. Sellers, meanwhile, are watching for a breakdown to expand bearish positions with the next target at 26,971.

NASDAQ TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

NASDAQ TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1-hour chart, a minor descending trendline is shaping bearish momentum in this timeframe. Sellers are likely to continue using the trendline as a reference point, with risk defined above it, to maintain pressure toward lower lows. Buyers, on the other hand, seek a breakout to the upside to position for a retracement toward the 30,000 resistance area. The red lines mark today's average daily range.

UPCOMING CATALYSTS

Thursday brings the latest US Jobless Claims figures, and Friday rounds out the week with the US Flash PMIs.