• Wall Street’s three major indexes closed in negative territory on Wednesday (06/09/23), with the Nasdaq’s 1% loss leading declines after stronger-than-expected services sector data fueled concerns that inflation is still quite heated and will keep interest rates high for some time. The Institute for Supply Management (ISM) Non Manufacturing PMI came in at 54.5 for August, higher than the 52.5 forecast. Traders were betting on a 93% chance that the Federal Reserve would leave interest rates unchanged after its meeting on September 20, while bets on another flat rates in November were around 57%; as reported by CME Group FedWatch.

• The market also showed little reaction to the Fed’s “Beige Book” snapshot of the U.S. economy a week ahead of the keenly awaited August inflation data and the Fed’s rate decision on September 20. The report showed modest U.S. economic growth in recent weeks while job growth was subdued, and inflation slowed in most parts of the country.

• US economic data: Trade Balance in July recorded a deficit of USD 65 billion, below expectations but the deficit widened from the previous month’s USD 63.7 billion. US Exports & Imports were seen increasing on both fronts. Later tonight the weekly Initial Jobless Claims data will again grab the attention of investors to show jobless claims should increase to 235k compared to 228k in the previous week.

• European Markets: German Factory Orders plunged -11.7% mom in July, in stark contrast to the previous month’s positive growth of 7.6%; even worse than the -4.0% forecast. German Construction PMI was still wallowing in contraction territory during August, along with France and the Eurozone as a whole. Only the UK was able to keep its Construction PMI in expansion territory (>50) during August although growth began to slow. Eurozone Retail Sales for July also dropped another -1.0% yoy. Today market participants will monitor UK housing data Halifax House Price Index (Aug.), German Industrial Production (July), Eurozone Employment Change 2Q23 as well as their 2Q23 GDP revision (projection).

• Asian Markets: Japan has released data on foreign purchases of Japanese bonds and stocks which fell further compared to the previous period; making Japan’s Foreign Exchange Reserves fell slightly to USD 1,251.2 billion in August from USD 1,253.7 billion in the previous month. Indonesia will also release its August FX Reserves where the result will be compared to July’s last position at USD 137.7 billion. Today China will get the spotlight ahead of the release of Trade Balance (Agus.) data and their negative Export & Import growth which is predicted to start slowing down.

• Commodities: Crude oil prices closed higher again on Wednesday (06/09/23) reversing earlier losses as traders anticipated a drop in US oil reserves amid continued production cuts by OPEC+. Brent crude settled at USD 90.6/ barrel, while US WTI climbed 85 cents to USD 87.54/barrel. Weekly data on US oil stocks collected by the American Petroleum Institute (API) unexpectedly dropped -5.521 million barrels, well above expectations of -1.492 million barrels. For information, the Dollar Index (DXY) rose to a high of 105.00, above a 6-month high. The stronger US Dollar is expected to make oil more expensive for non-US consumers, which will affect demand. In addition, US oil refineries usually enter a maintenance period in September-October. Additional production from Iran, Venezuela, and Libya is also expected to balance global supply-demand.

• JCI: reached the 7000 level for the fourth time since late August (even touched a high of 7020 this time), but again closed below the 7 head area; with a Shooting Star like candle (in the Resistance area). NHKSI RESEARCH must again remind the potential trend reversal that is still tightly looming, as long as JCI never managed to break the psychological level of 7000 steadily. 

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