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Nasdaq 100 Index (USTECH CFD)

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Axi Symbol: USTECH

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The Financing Reference Rate: US Fed Funds Upper Target

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3 Day Financing: Friday

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Short Position Overnight Fee: displayed on the trading platform

Pricing is indicative. Past performance is not a reliable indicator of future results. Client sentiment is provided for general information only, is historical in nature and is not intended to provide any form of trading or investment advice - it must not form the basis of your trading or investment decisions.

What is the Nasdaq 100 index?

The Nasdaq 100 index, often referred to as the "NDX," is a stock market index that tracks the performance of 100 of the largest and most actively traded non-financial companies listed on the Nasdaq Stock Market. The index includes companies from various sectors, such as technology, telecommunications, biotechnology, and retail. However, financial companies like banks are excluded from the index.

The Nasdaq 100 is a market capitalisation-weighted index, which means that the companies with higher market capitalisations have a greater impact on the index's overall performance. In other words, the larger and more influential a company is, the more its stock price movements will affect the index.

The Nasdaq 100 is considered a benchmark for the performance of the technology and growth-oriented sectors of the stock market. It is widely used by investors, traders, and financial professionals to gauge the overall health and trends of the technology-heavy and typically innovative sectors of the economy.

Some well-known companies listed in the Nasdaq 100 include Apple, Microsoft, Amazon, Google (Alphabet), Facebook (Meta), and many other prominent technology and biotechnology firms. The index is periodically rebalanced to ensure that it reflects the current market capitalisation and composition of the included companies.

Nasdaq 100 historical performance

Introduced in 1985, the NASDAQ 100 swiftly emerged as the premier benchmark for assessing the performance of the largest non-financial companies listed on the NASDAQ exchange.

In the 1990s, the index was primarily composed of technology and telecommunications companies, reaping substantial rewards during the dot-com era. Nonetheless, it suffered a sharp decline in the early 2000s when the dot-com bubble inevitably burst.

The NASDAQ managed to stage a relatively quick recovery, partly attributable to its growing diversification with the inclusion of companies from various sectors.

Although impacted by the Global Financial Crisis of 2007-2009, the NASDAQ fared relatively better than indices heavily invested in financial stocks.

The subsequent decade, the 2010s, witnessed a remarkable surge in the index, driven by the resurgence of technology stocks. The COVID-19 pandemic further propelled the NASDAQ, as the shares of tech and e-commerce companies surged during the early stages of the crisis.

What affects the price of the Nasdaq 100 index?

The price of the Nasdaq 100 index is influenced by several factors, including the individual stock prices of the 100 companies that make up the index and broader market conditions. Here are some key factors that can affect the price of the Nasdaq 100:

  • Individual company performance: Because the Nasdaq 100 is a market capitalisation-weighted index, constituent companies with larger market capitalisations have more influence on the index's performance. Therefore, the stock price movements of larger companies, such as technology giants like Microsoft, Amazon, Apple, Facebook (Meta), and Google (Alphabet), can significantly influence the index's price.
  • Technology sector performance: Since the Nasdaq 100 is heavily weighted towards technology companies, the overall performance of the technology sector can have a larger impact on the index's price. Positive news, earnings reports, or developments within the tech sector can lead to increased investor confidence and drive the index higher.
  • Earnings reports: Quarterly earnings reports from the individual companies within the Nasdaq 100 can cause significant movements in the index. Positive earnings surprises from influential companies can boost investor sentiment and drive the index upward, while disappointing earnings can have the opposite effect.
  • Market sentiment and investor confidence: The overall sentiment in the financial markets can greatly impact the Nasdaq 100. Positive economic indicators, geopolitical stability, and strong investor confidence can lead to bullish market conditions and drive the index higher. Conversely, negative news or uncertainty can lead to a decline in the index.
  • Macroeconomic factors: Broader economic indicators, such as Gross Domestic Product (GDP) growth, unemployment rates, interest rates, and inflation, can affect the performance of the Nasdaq 100. A strong economy generally bodes well for the companies within the index and can result in upward movements.
  • Central bank policies: Decisions made by central banks, especially the Federal Reserve in the United States, regarding monetary policy and interest rates can impact the overall stock market and, consequently, the Nasdaq 100.
  • Major corporate announcements: Significant announcements from individual companies within the index, such as mergers, acquisitions, or large-scale product launches, can have an impact on the Nasdaq 100.
  • Sector rotations: Investor preferences for certain sectors can shift over time, leading to sector rotations. If investors move their money from one sector to another, it can cause fluctuations in the Nasdaq 100 based on the changing weights of the constituent companies.
  • Index rebalancing: The Nasdaq 100 is periodically rebalanced to reflect changes in market capitalisation and company composition. Announcements regarding these rebalancing actions can impact the index.

What to watch out for when trading the Nasdaq 100 index?

When trading the Nasdaq 100 index, it's important to be aware of scheduled announcements and key market events that can have a significant impact on the index and its constituent companies. Here are some events and announcements to watch for:

  • Quarterly corporate earnings reports from Nasdaq-listed companies, e.g., Apple, Microsoft, Amazon, Alphabet, and Meta
  • Federal Open Market Committee (FOMC) meetings
  • Monetary policy announcements from the U.S. Federal Reserve
  • US interest rate decisions
  • US GDP data
  • US non-farm payroll figures
  • US manufacturing Purchasing Managers' Index (PMI)
  • US Trade Balance numbers
  • US retail sales data
  • Annual re-ranking of the index (December).
The data is sourced from third-party providers. This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.

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