A USB2 bus-powered "portable" 5400rpm drive will stream stereo audio all day without problems.
If you're mixing tracks or applying effects live then it will depend on how much of the laptop's resources are required to do that, and how many tracks the external disk needs to be streaming.
The only way to find out for sure if what you want to do will work is to try it and see. Fortunately USB bus-powered drives are pretty cheap these days.