European Shares Edge Lower as Investors Await Fed Meeting Minutes

 China's Services Sector Sees Slowest Expansion in Five Months

• European shares dip as investors await PMI data and Fed meeting minutes for insights into future monetary policy.
• China’s services sector experiences slowest expansion in five months due to weakening demand.
• Industrial activity in France and Spain surpasses expectations.
• Escalation in technology dispute between US and China as export controls on metals used in semiconductor manufacturing are implemented.
• HCOB Eurozone Services PMI for June 2023 revised downwards to 52.0, indicating modest and weakened growth.
• New workloads increased at a marginal pace, the slowest in five months, attributed to weaker sales performances to non-domestic customers.
• Volumes of incomplete business stabilized, while the rate of job creation softened to a three-month low.
• Input cost inflation slowed to a 25-month low, and output charge inflation reached its lowest level since October 2021.
• Business confidence declined to the lowest level recorded so far this year.

The STOXX 600 trades lower by approximately 0.5% around €460, displaying a micro balanced behavior within the developing value area during the European trading session. The revised PMI data, showing a decline, contributes to a selling sentiment, although absorption around the prior POC level offers support for the buying side.

The euro is trading 0.1% higher against the dollar, exhibiting a relatively balanced pattern on the daily interval, with evident interest from euro long buyers near the lower extreme. The short-term perspective reveals a wider swing, influenced by negative economic data that reinforces the possibility of interest rate increases to address inflationary pressures, which could benefit the euro. However, technical resistance might be encountered around the prior VWAP close level, while absorption around the lows keeps the euro in positive territory.

The dollar remains relatively unchanged, with a slight increase in the short-term perspective, rising by approximately 0.15% on the monthly basis, which might exert pressure on the euro and equities sector. Technically, the market could explore lower prices, potentially providing support for the euro.

The upcoming FED meeting minutes hold significance as they may provide insights into the US monetary policy trajectory, guiding the assessment of rate developments. The current hawkish rhetoric has a bearish impact on equities and commodities, while benefiting the dollar due to the tightening cycle. However, any indications of a dovish tone could offer support to the US stock market.

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Reposted by The Private Banker.

Euro Area Producer Prices Decline in May 2023

 First Month of Decline in Producer Prices Since December 2020

• Producer prices in the Euro Area declined by 1.5% YoY in May 2023.
• This marked the first month of decline in producer prices since December 2020.
• Energy costs experienced a significant 13.3% slump, contributing to the overall decline.
• Prices for intermediate goods dropped by 1.5% and inflation slowed for capital goods, durable goods, and non-durable consumer goods.
• Excluding energy, producer price inflation decelerated to 3.4% YoY in May.
• On a monthly basis, producer prices fell by 1.9%, marking the fifth consecutive month of decrease.
• Energy costs saw a substantial decrease of 5.0% in May, driving the overall drop in prices.
• Prices for intermediate goods declined by 1.0% and non-durable consumer goods dropped by 0.1%.
• The cost of capital goods remained unchanged, while durable consumer goods rose by 0.3%.
• Excluding the impact of energy, producer prices showed a decrease of 0.4% in May.

The decline in producer prices in the euro area may provide a boost to production and help alleviate inflationary pressures, particularly in light of the current hawkish stance of central banks. This data could have a bearish impact on the euro, while the equities market could potentially find support from the positive price developments.

Reposted from The Private Banker