S&P 500, Nasdaq 100 Under Pressure as Weak Chinese Retail Sales Data Weighs on Sentiment

S&P 500, Nasdaq 100, China, Covid, China Retail Sales – Talking Points

• China retail sales reveals impact of Zero Covid; risk under pressure
• S&P 500 continues to oscillate around key 4,000 level
• Nasdaq 100 futures fail to retest Friday’s highs; 12000 in focus

Risk assets are under pressure on Monday as weaker-than-expected retail sales data out of China has started the week out on a sour note. The significant miss on the retail sales print highlights the impact China’s “Zero Covid” policy is having on the economy, which continues to exacerbate global supply chain issues. The potential remains for further escalation in Eastern Europe, as Sweden and Finland officially announced their intention to join NATO.

Market participants will be eager to see if risk can carry on from Friday’s strong rally, which some believe may have carved out a short-term bottom. A break toward last week’s lows for the S&P 500 could see the benchmark officially fall into “bear market territory,” which occurs following a 20% decline. With the Nasdaq 100 firmly in a bear market, it could be a matter of time before the S&P 500 follows suit.

S&P 500 Futures (ES) 1 Hour Chart

Chart created with TradingView

S&P 500 futures continue to pull back following Friday’s melt higher, with price consolidating around the 4000 level early in the NY session. With all rallies into 4050 being sold over the last week, it would seem we firmly remain in a “sell the rip” environment. Price may look to revisit the 3960 area should current weakness prevail, as this area has acted as support multiple times over the last couple of weeks. A break of 3960 could bring the weekly lows below 3875 into focus.

Nasdaq 100 Futures (NQ) 1 Hour Chart

Chart created with TradingView

Nasdaq 100 futures continue to be the proverbial “punching bag” for US markets, with the air seemingly coming out of the sails of frothy tech names. With the bigger tech behemoths like Apple starting to really come under pressure, the outlook for the Nasdaq 100 remains bleak. Rallies into 12500 have been faded of late, and price may look to retest 12129 on any extended move lower. For any real move higher to gain traction, price would need to push above the 12500-600 zone that continues to act as overhead resistance.

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— Written by Brendan Fagan, Intern

To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter