Nasdaq 100 Forecast: QQQ rises on US-China trade talk hope, FOMC up next

US futures

Dow futures -0.74% at 41040

S&P futures 0.4% at 5626

Nasdaq futures 0.4% at 19854

In Europe

FTSE -0.58% at 8545

DAX -0.52% at 23150

• Stocks rise on hopes of a trade war de-escalation
• The Fed is expected to leave rates unchanged
• Disney rises after beating earnings and revenue forecasts
• Oil rises on news of US-China trade talks

Fed is expected to leave rates unchanged

U.S. stocks are set to open higher in hopes of a de-escalation in trade tensions between the US and China, and as investors await the Federal Reserve interest rate decision later today.

The US will meet with China over the weekend in Switzerland for early-stage trade discussions. The meeting comes after weeks of tip for tat trade tariffs, which have raised fears of slowing growth, rattling financial markets.

While this round of talks is unlikely to bring any concrete results, it is undoubtedly a step in the right direction. The meeting comes as the outlook remains uncertain with many companies binning guidance.

Trump's administration has said that trade talks are taking place with a potential deal coming with major trading partners. However, details and tangible results are still lacking.

Attention will now turn to the Federal Reserve interest rate decision later today. The Fed is widely expected to hold interest rates unchanged at 4.25 to 4.5%. The market is pricing in a first-rate cut in July, with 79 basis points worth of cuts this year. Recent data has been mixed, with soft data pointing to a deterioration, whilst hard data, particularly surrounding the labour market, remains resilient.

Fed Chair Powell could use this opportunity to push back on market expectations. A hawkish lean could spook the markets, sending stocks lower.

Corporate news

Disney is rising over 7% after beating Q2 earnings estimates. The entertainment company posted EPS of $1.45 on revenue of $23.62 billion, above forecasts of $1.20 and $23.14 billion. The company also lifted its full-year outlook to $5.75, ahead of $5.43 expected. Disney agreed to partner with Miral to build a theme park resort in Abu Dhabi.

Super micro computer is falling 6% after missing expectations for fiscal Q3 and offering weak guidance for the current quarter. The server may come posted EPS of $0.31 per share on revenue of $4.6 billion.

Uber is falling 3% after reporting revenue of $11.53 billion for Q1 which was below forecasts of $11.62 billion. Earnings beat estimates.

AMD is rising over 1% after stronger-than-expected Q1 results, the chipmaker posted EPS of $0.96 on revenue of $7.44 billion.

Nasdaq 100 forecast – technical analysis.

The Nasdaq’s recovery from the 16325 low ran into resistance at the 200 SMA at 20,180 before easing lower. The price is consolidating around 20k. The RSI is above 50, supporting further gains given the right catalyst. Buyers will look to rise above the 200 SMA to extend gains towards 21k. Support can be seen at 19,000-19300 zone.

FX markets – USD falls, GBP/USD rises

The USD is edging higher, boosted by positive developments between the US and China, which could be the start of a path to de-escalation. Still, the mood remains cautious ahead of the Fed rate decision.

The EUR/USD is modestly lower after retail sales came in weaker than expected, falling 0.1% in March, following a downward revision to a 0.2% increase in February. Sales remain weak amid cautious consumers, and despite higher wages in the region.

GBP/USD is falling amid a stronger USD and as attention turns to the BOE interest rate decision tomorrow, where the central bank is expected to cut rates by 25 basis points. The markets are pricing in 94 basis points of BoE cuts by the end of the year. The UK has agreed a trade deal with India and is in talks with the US.

Oil jumps on US-China trade talk news

Oil prices are rising for a second straight session, boosted by news of US-China trade talks set to be held this weekend.

The US and China are due to meet in Switzerland, which could be the first step towards resolving the US-Sino trade war.

The move higher helped oil recover from a four-year low reached earlier this week after the OPEC+ agreed to speed up output increases. However, the agreement raised fears of oversupply at a time when the demand outlook was deteriorating.

Some US producers are signalling that they could cut spending in a sign that the country's oil output may have peaked, contributing to a rise in oil prices.