European Markets Surge While US Stocks Face Mixed Sentiment Ahead of Earnings Season
European equities saw strong performance on Thursday, with the Stoxx 500, DAX, and FTSE hitting fresh record highs. This surge was driven by strong corporate earnings, a positive German Factory Orders report, and growing optimism over interest rate cuts. Meanwhile, UK stocks outperformed their continental peers as the pound weakened after disappointing construction PMI data and the Bank of England’s decision to cut rates while halving its growth forecast.
Across the Atlantic, US index futures traded mostly higher, but US stocks have yet to hit new all-time highs. This could signal that the bullish momentum for US equities is losing some steam, especially as the market awaits more earnings results. Notably, the Nasdaq 100 forecast remains positive from a technical perspective, suggesting the index still holds promise despite recent fluctuations.
Geopolitical Uncertainty and Market Stability
Despite some volatility in the US-China trade relationship, including President Trump’s tariff delays on Mexico and Canada, US stocks have been relatively buoyant. This delay in trade tensions has helped bolster investor sentiment, while Treasury yields remain near recent lows, providing support to the equity markets.
While the US trade wars have caused disruptions, investor focus is now shifting towards economic data and corporate earnings, as a more stable environment begins to take shape. Key upcoming data, including jobless claims and nonfarm payrolls (NFP), could influence the Federal Reserve’s interest rate expectations and provide fresh clues on the outlook for equities in 2025.
Tech Earnings Under Scrutiny
Investor attention is squarely on Amazon, which is due to release its earnings after the bell. Wall Street is eager to see the company’s AI investment plans, especially in light of competition from China’s DeepSeek, a cost-effective AI model that’s raising new concerns.
On the earnings front, Qualcomm reported stronger-than-expected results, benefiting from AI-driven smartphone demand, but warned of a slowdown in its patent licensing business due to the expiration of its agreement with Huawei. Meanwhile, Alphabet faced challenges with cloud revenue growth and its $75 billion AI expenditure plans for 2025, sparking worries about excessive spending.
Despite some earnings disappointments, markets have largely brushed off these results. However, the tech sector remains under pressure, especially if more companies follow suit with weaker-than-expected earnings.
Nasdaq 100 Technical Forecast: Key Levels to Watch
From a technical standpoint, the Nasdaq 100 forecast remains bullish, but there are key levels to monitor. Resistance is found around 21,700 to 21,865, a zone that has proven difficult to break through. Any signs of weakness here could lead to a pullback, particularly if companies in the sector fail to impress in upcoming earnings reports.
On the downside, support levels are near 21,580 and 21,466. If the index pulls back below these levels, the broader bullish trend could still hold as long as it doesn’t break through long-term support around the 20,530–20,760 range. While short-term fluctuations are expected, a more sustained bearish move would require a decisive breakdown at these critical levels.
As the earnings season continues to unfold and more economic data comes in, investors will have to navigate these technical and fundamental factors to assess whether the bullish trend in the broader market will continue or if volatility will increase.
