Despite a significant downward revision to US GDP and final sales data, global stock markets remain buoyant. Traders appear to be looking past soft economic indicators, instead zeroing in on the growing possibility of Federal Reserve rate cuts. The Nasdaq 100 cash index notched a fresh record high on Thursday, and futures markets suggest further upside is likely. Meanwhile, Australia’s ASX 200 shows signs of recovery, riding the coattails of global risk-on sentiment.
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US GDP and Spending Revised Lower as Fed Eyes Inflation
The final release of US GDP for Q1 was revised down to just 0.5% q/q, from an initial -0.2% estimate and well below the 2.4% growth seen in Q4. Final sales were also sharply downgraded to -3.1% from 2.9%, a far cry from the 3.3% seen in the previous quarter. Meanwhile, PCE prices were revised slightly higher to 3.8% q/q from 3.7%, up from 3.3% in Q4. Real consumer spending slipped to 0.5% — its weakest pace since 2020 — as Trump’s trade war began to rear its ugly head in the Q1 figures.
Taken together, the data paints a picture of a slowing US economy — one that could warrant Fed cuts despite Powell’s insistence that Trump’s proposed tariffs will stoke inflation. Speaking before Congress this week, Powell maintained that inflation is likely to rise over the summer, which justifies the Fed’s cautious approach. All the while, Trump is publicly berating Powell as a “moron” and “stupid,” while calling for a 100bp rate cut. Powell may well be crossing his fingers for a hot PCE inflation report later today — but if recent data is anything to go by, markets should be on guard for a softer print.
Nasdaq Hits Fresh Highs Despite Soft Data as Markets Bet on Fed Cuts
Still, global indices are marching higher in unison, buoyed by a return in risk appetite. The Israel–Iran conflict has faded into the background with a ceasefire in place, and Trump’s tariff threats seem to be losing potency. That’s giving traders room to refocus on Fed policy and its potential to deliver rate cuts. Wall Street, ever the optimist, appears to be betting on a soft landing rather than a recession.
Nasdaq 100 Futures (NQ) Technical Analysis
The Nasdaq 100 cash index closed at a fresh record high on Thursday, just shy of the 22,500 level. This keeps the bullish target for Nasdaq 100 futures intact around 25,000 — measured from the April low to the runaway gap, as such gaps often sit near the midpoint of a move. The adjusted Nasdaq 100 futures contract has yet to hit a record high, but that could change if today’s core PCE figure prints even slightly softer.
The daily trend structure likely favours dips for bulls. Perhaps we’ll see the obligatory shakeout around prior record highs, though bulls could step back in upon any dips towards 22k near the current June VPOC (volume point of control). But the strength of the trend suggests such a pullback may not be achieved.
Australia 200 Index Analysis (ASX 200 Cash, SPI 200 Futures, AUS200)
The ASX 200 cash index carved out a notable swing low on Monday just above 8420. While the daily RSI (14) shows mild bearish divergence, both RSI (14) and RSI (2) remain below overbought territory, and I’m inclined to overlook the divergence given the broad risk-on sentiment across global equities.
ASX 200 Technical Outlook
Tuesday delivered a decisive bullish range-expansion day, snapping an 8-session losing streak. That momentum looks set to continue, with SPI 200 futures rising 0.6% overnight and setting the stage for a meaningful gap higher out of the recent 2-day range.
However, ASX 200 futures now sit just 1–2 average trading ranges from their record high, which may limit upside on the cash index near 8360 if futures stall. Still, like the Nasdaq 100, the preference is for an eventual breakout to new highs—barring the emergence of any fresh risk-off catalysts.
Economic Events in Focus (AEST / GMT+10)
09:30 JPY CPI (Jun), Tokyo CPI (Jun), Tokyo Core CPI (Jun), CPI Tokyo Ex Food and Energy (Jun), Unemployment Rate (May), Jobs/applications ratio (May) (USD/JPY, Nikkei 225)
09:50 JPY Retail Sales (May), Large Retailers' Sales (May), Large Scale Retail Sales (May) (USD/JPY, Nikkei 225)
11:30 CNY Chinese Industrial Profit YTD (May) (USD/CNH, China A50)
12:30 SGD Unemployment Rate (Q1) (USD/SGD, STI Index)
19:00 EUR Business and Consumer Survey (Jun), Selling Price Expectations (Jun) (EUR/USD, DAX)
21:30 USD FOMC Member Williams Speaks (USD, S&P 500, Nasdaq 100, Dow Jones, Gold, Crude Oil)
22:30 USD Core PCE Price Index (May), PCE Price Index (May), Personal Income (May), Personal Spending (May), Real Personal Consumption (May) (USD, S&P 500, Nasdaq 100, Dow Jones, Gold, Crude Oil)
22:30 CAD GDP (Apr & May) (USD/CAD, TSX)
23:00 USD Dallas Fed PCE (May) (USD, S&P 500, Nasdaq 100, Dow Jones)
23:15 USD Fed Governor Cook Speaks (USD, S&P 500, Nasdaq 100, Dow Jones)
00:00 USD Michigan Sentiment Report (Jun) (USD, S&P 500, Nasdaq 100, Dow Jones)
01:00 CAD Budget Balance (Apr) (USD/CAD, TSX)
01:30 USD Atlanta Fed GDPNow (Q2) (USD, S&P 500, Nasdaq 100, Dow Jones)
03:00 USD U.S. Baker Hughes Oil & Rig Count (USD, Crude Oil)
06:30 USD Fed Bank Stress Test Results (USD, S&P 500, Nasdaq 100, Dow Jones)
View the full economic calendar
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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