The US Fed kept rates unchanged this week at 5.25%-5.50%, but delivered a hawkish message, cementing the higher-for-longer prospects. It pointed to a tighter policy path ahead than previously expected, since it maintained the median rate projection (5.6%) that suggests one more hike this year, while lowering the forecast for 2024 to 5.15 (from 4.6% previously).
Markets still believe that rates have already peaked but pricing for the first rate cut has been pushed to July 2024 the earliest, according to CME's FedWatch Tool. The Fed's aggressive stance stifles the AI blaze, which had driven the tech sector's rally during the first half of the year. Markets now look to the next earnings season which is coming up fast. Tech giants at the AI front, such as Microsoft, will be among the companies on our radar over the coming months.
NAS100 has slipped into negative territory for the quarter, with September traditionally being an unfavorable month. It has fallen to key support area (14,740-14,555), testing the upper part. Daily closes below it would expose it to the 200Days EMA (14,070-80).
However, the AI revolution can continue to propel the index since it is a transformational force and the reaction to the Fed's decision may have reached its limit. On the technical front, the drop looks stretched and NAS100 already finds support today. It has the potential to rebound, but will need catalyst to reclaim the EMA200 (at around 15,220) and shift bias to the upside.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.