The US stocks closed mixed, with the Dow Jones being the only index in green amid weakness in the S&P 500 and Nasdaq as investors took profits after a megacap stocks rallied over the past month, ahead of the release of Inflation data and the US central bank meeting decision next week. Market participants now see a 69% chance that the US central bank will skip raising interest rates at the upcoming FOMC Meeting on 13-14 June, down from 77% probability, as reported by the CME Group FedWatch Tool. Energy index rose 2.65% after oil prices edged higher following OPEC+’s decision to cut production; topped with a drop in US oil reserves figures released yesterday.
JCI, which has not been able to break through the first resistance in the range of 6660-6680 in recent days, was apparently affected by the gloomy market atmosphere after China released Trade Balance data (in May) which failed to meet expectations. China’s Trade Balance surplus dropped to USD65.81 billion in May, versus USD 90.21 billion in April. China’s exports contracted 7.5% yoy, the first decline in 3 months and the deepest fall since January; while Imports also eroded 4.5% yoy amid weak domestic market demand, sluggish commodity prices, and a stronger USD against other major world currencies. In addition to China, the US also announced Trade Balance (Apr.) which recorded a lower-than-expected deficit at minus USD 74.6 billion, but swelled from the previous period at USD 60.6 billion. The atmosphere of economic slowdown is also still felt in continental Europe; where Germany reported April Industrial Production could not exceed expectations or performance in the previous month. Meanwhile, the UK reported housing sector health indicators were also lower than expected. On the other hand, this indicates that UK inflation may be getting more subdued and explains why the British Pound may look rather bearish going forward. Furthermore, earlier this morning, positive sentiment has emerged from the release of Japan’s 1Q23 GDP data which managed to record economic growth above forecasts & the previous period. In the afternoon, global market participants will focus on the (revised) Euro Zone GDP reports for 4Q22 and 1Q23; as well as the weekly US Initial Jobless Claims figures. Considering the sentiment rolling in the market, NHKSI RESEARCH expects this consolidation will soon end its short term downtrend as it contains limited downside potential only towards Support 6560-6550. Instead, JCI should try to break back through Resistance 6660-6670 as the first recovery step. Advise to Average Up on Break is still the wisest to apply.
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