Nasdaq 100 sinks as ECB gets more hawkish; ASX 200 in danger, eyeing Chinese CPI data

Recap of Thursday’s trading session on Wall Street

Sentiment notably deteriorated on Wall Street looking back to Thursday’s trading session. Nasdaq 100, S&P 500 and Dow Jones futures fell 2.7%, 2.4% and 1.9% respectively. For all three major benchmark stock indices, that meant the worst daily performance since May 18. With that in mind, what seemed to drive the pessimism?

We would have to go back further to the European session when the European Central Bank (ECB) announced its last monetary policy announcement. Until recently, the ECB was considered a relatively dovish central bank. President Christine Lagarde has helped further downplay this notion amid mounting inflationary pressures.

The ECB raised inflation expectations while lowering growth forecasts. He also announced that he would stop buying assets from July, with plans to raise short-term interest rates. So another central bank takes a hawkish turn, amplifying concerns about the flight of cash from financial markets and pushing bond yields higher, undermining risk-sensitive assets. Unsurprisingly, technology was one of the worst performing sectors in the S&P 500 on Thursday – see chart below.

Nasdaq 100 Technical Analysis

On the daily chart, the Nasdaq 100 fell below short-term support, which was around 12465. This highlighted the May low at 11491, which sits just above the extension 100% Fibonacci at 11443. the remaining 24 hours could open the door to a return to last month’s bottom. Otherwise, key resistance appears to be the 61.8% Fibonacci extension at 12904.

Nasdaq 100 Futures Daily Chart

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