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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