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Charting the Markets: 30 June FTSE 100, DAX 40 and S&P 500 try to end month and quarter on a high. EUR/USD slips while GBP/USD recovers and USD/JPY rises despite risk of BoJ intervention. And gold and corn prices decline, but WTI recovers to $70. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 30 June 2023 This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

The Reserve Bank of Australia meets to decide on Aussie interest rates on Tuesday 4th July. Richard Snow from Daily FX looks at the risk around AUD/USD as suggests that there may be a downside risk to AUD/USD. Jeremy Naylor | Analyst, London | Publication date: Friday 30 June 2023

As we approach the halfway mark of 2023, the ASX200 is up a tepid 2.24% for the Calendar Year to Date (CYTD). Source: Bloomberg Indices Commodities S&P/ASX 200 Inflation Interest Interest rates Tony Sycamore | Market Analyst, Australia | Publication date: Thursday 29 June 2023 A return well below what might have been expected after the ASX200 leapt from the starting blocks in January (+6.22%) on optimism around the China reopening and hopes that the headwinds of rising interest rates and inflation encountered in 2022 were in the rear vision mirror. Unfortunately, that optimism has proved to be somewhat misplaced. Confounding most, the reopening in China has disappointed to the point that Chinese authorities recently responded by easing policy to prevent a double-dip slowdown. While a lack of growth/technology stocks within the index cushioned the ASX200 from the bear market that the Nasdaq encountered in 2022, the same lack of technology stocks meant the ASX200 has not benefitted from the Nasdaq’s spectacular rebound in 2023. However, the ASX200 has not only been left in the shadows by indices with a high concentration of tech stocks. Global peers, including the Japanese stock market, the Nikkei, is up 27.2% CYTD, the German stock market, the DAX, is up 17% CYTD, and the benchmark US stock index, the S&P500, is up 14.63%. Most closely mirroring the ASX200s returns, the Dow Jones is up just 2.35%. ASX200 Sector Analysis Drilling down by sector, a clearer picture starts to emerge. The IT (+26.80%), Telecom (+8.59%), and Industrial (+8.83%) sectors have been the strongest-performing ASX200 sectors in 2023. However, these three sectors combined account for a paltry ~13.5% of the index. In contrast, the largest sector, the Financial Sector, which accounts for 27.1% of the index, is down 2.79% CYTD. The third largest sector, Health Care, which accounts for 10.06% of the index, is up just 0.02% on the year. The second largest sector, Materials, which accounts for a punchy 23.8% of the index, is up just 3.34% CYTD. The Financial Sector has become the Achilles heel for the ASX200 in 2023. Rising interest rates have bought stress to the global banking system. Locally banks are experiencing Net Interest Margin (NIM) compression into a slowing economy, which has raised expectations that bank earnings have peaked and downgrades may follow. Elsewhere, China’s slower-than-expected economic recovery during the first half of 2023 has weighed on the commodity prices, providing another headwind via the local bourse’s heavy exposure to resource stocks. Source: SPGlobal.com Macro Analysis The negatives Reserve Bank of Australia (RBA) – The key local macro event in 2023 has been a continuation of the RBA’s rate hiking cycle, which many expected to end late last year. In recent months the RBA appears to have lost patience with persistently high inflation, and following back-to-back “surprise” 25 basis point (bp) rate hikes, the interest rate market expects an RBA peak rate of 4.6% before year-end. GDP (Gross Domestic Product) – quarter one (Q1) 2023 GDP rose by 0.2% QoQ (quarter on quarter) for an annual rate of 2.3%. While this was the sixth consecutive period of economic growth, it was the slowest rate since major covid-19 pandemic restrictions ended. The subdued GDP reading shows that rising interest rates and cost of living pressures are slowing the economy. The household saving rate fell to 3.7%, its lowest level since 2008. Inflation – In May, the Monthly headline consumer price index (CPI) indicator eased to 5.6% year-over-year (YoY) from 6.8% in April. The trimmed mean (core inflation) eased to 6.1%YoY from 6.7% in April. Both measures remain well above the RBAs target band of 2-3%. Summary – Elevated inflation, rising interest rates and slowing growth are headwinds for equities and the ASX200. The Positives China – Chinese authorities recently cut key lending rates following a run of soft Chinese growth and activity data. The rate cuts are expected to be part of a broad package of stimulus measures. The shift towards easier policy in China is a tailwind for ASX-listed resource stocks and the ASX200. Source: RBA Technical Analysis The ASX200 has spent the past three months trading sideways in a range between resistance at 7370/7390 and support at 7075/7055. Until the ASX200 sees a sustained break of either of these levels, further sideways-range trading is expected. Aware that a sustained break of range extremes should see the ASX200 extend the move by 150 points (~2%) in the direction of the break. Source: TradingView Summary Balancing out the headwinds of elevated inflation, higher interest rates, and slowing growth against the tailwinds of expected China stimulus, we look for the ASX200 to finish the year at 7350.

Nationwide house price index falls 3.5% in June, the most since 2009 Compared with June last year, the average house price was down 3.5% after a 3.4% annual fall in May, the most since 2009. Jeremy Naylor | Analyst, London | Publication date: Friday 30 June 2023 Indices overview The S&P 500 and Nasdaq are about to record a fourth consecutive month of gains. In June alone the S&P 500 has rose over 5%. Meanwhile it was a mixed session overnight in Asia. The Nikkei underperformed the region, but posts monthly of 7%, as it hit 33-year high on June 16. The Japanese currency is about to post a third straight week of losses against the dollar and briefly passed the ¥145 mark on Friday. It was at that level that, in September 2022, the Japanese government intervened to support its currency. It intervened again a month later when USD/JPY rose to ¥151. China's factory activity declined for a third straight month in June. The official NBS manufacturing PMI rose to 49, from 48.8 in May, crucially staying below the 50-point mark that separates expansion from contraction. Services sector activity for June recorded its weakest reading since China abandoned its strict Covid curbs late last year but remained well above 50. The readings pushed the yuan to a new eight-month low. UK GDP As expected, UK gross domestic product (GDP) final reading for the first quarter (Q1) shows a 0.1% rise quarter-on-quarter (QoQ). British house prices rose by 0.1% in June from May, according to Nationwide. Compared with June last year, the average house price was down 3.5% after a 3.4% annual fall in May, the most since 2009. The drop was expected as the Bank of England (BoE) puts all its efforts to curb inflation rate among the world's big rich economies. Much of the impact of higher borrowing costs on mortgage-holders has yet to hit the housing market. Industry body UK Finance estimates 800,000 fixed-rate mortgages will need to be refinanced in the second half of this year, and a further 1.6 million in 2024. There is a total of around nine million residential mortgages in the UK. Macroeconomics Among the macroeconomic indicators expected today, the market will be particularly focussed on one. Core PCE price index is expected to rise by 0.4% in May compared to April. Year-on-year (YoY), the index is forecast at 4.7% unchanged on last month. Core PCE is the Fed's favoured indicators when it comes to look at price evolution. Equities Nike shares dropped 4% in extended hours after it forecast first quarter revenue below Wall Street estimates. Investors were worried that sales in China would disappoint given the country's lacklustre economic recovery. This wasn't the case at all. Greater China was in fact a bright spot in Nike's quarterly report. Sales jumped 16% after three consecutive quarters of declines. It was North America's performance that weighed on earnings and sales, where still-high inflation has led to consumers buying essential goods and reducing discretionary spending. Sales rose 5% in the region in the fourth quarter, the slowest in four quarters. Overall, it was a tepid report. Nike's fourth quarter revenue rose to $12.8Bln, marginally beating estimates of $12.58Bln. Earnings came in at 66 cents per share, missing estimates by two cents. There was nothing exciting it terms of forecasts either. As Nike's CEO said, "the environment is going to continue to be promotional", as the group is still struggling to get rid of excess inventories. Nike's gross margin fell 140 basis points to 43.6% in Q4. Nike expects revenue to be between flat to up low-single digit in Q1, compared with analysts' average expectation of 5.8% rise. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

After three days of central bank speeches at the ECB forum in Sintra, the market agrees that rates have not yet peaked, and cuts won't come for some time. Jeremy Naylor | Analyst, London | Publication date: Thursday 29 June 2023 IGTV’s Jeremy Naylor looks across some of the commentary from Powell, Lagarde and Bailey. This has driven the US dollar to a two-week high and sent the price of gold down. (Video Transcript) ECB Forum After three days of speeches and commentary from the Portuguese Resort in Sintra for the European Central Bank (ECB) Forum, one big theme has emerged, and that is we should expect more interest rate rises to come across the board. Let's take a look at some of the commentary that we've seen for Jerome Powell: policy hasn't been restrictive enough for long enough. Meanwhile, the European Central Bank Chief Christine Lagarde said it's not seeing enough tangible evidence of the fact that underlying inflation, particularly domestic prices are stabilising and moving down, and Andrew Bailey was somewhat more cautious. The Bank of England (BoE) governor said the bank would do what is necessary, but it remained to be seen if market bets would prove correct. He said they've got a number of further increases priced in for us, but he said my response would be to that. Well, let's wait and see. One thing that the Fed, Bank of England and the European Central Bank agree is that recession is not on the cards. FX markets Let's take a look at what's been happening on the foreign exchange markets as a result of all this. It's broadly been positive over the last three or four days for the dollar basket. And you can see on this chart here with just about the hundred period moving average, that blue line there at 10275. And this means that we've got money coming out of other currencies and you can see this EUR/USD trade, secondhand row of losses at the moment for the euro/dollar down at 10896. It hasn't broken like we've seen the dollar against sterling. Yesterday's big losses broke us down below this line of price support at 12679, and we're picking up on that negative trade today down at 12631. So if you're short on this, the stop goes above that prior line of support, now resistance. So your stop would be at around about the 127 level with a, you'd have taken this down further if you think that it's not just the Bank of England, but it's the Fed also raising interest rates. But the one runaway trade has been this Japanese yen. It's a weakening yen story right across the board. There's still no evidence that the Bank of Japan (BoJ) is going to be raising interest rates anytime soon. So, with the Fed still moving up in terms of restrictive monetary policy, you've got money coming out of the yen, the dollar now trading there again at levels not seen since the 10th of November, 2022, 14462. It's just a question of what the Bank of Japan is going to do, and the authorities are going to try and stem some of this weakness in the Japanese yen. Gold So the other trade out of all this is what's going on with the price of gold, as we see money going into the dollar, dollar price, commodities suffering as a result. And we've got a print now down here below that prior line of support at 1910, which you've been watching on the Early Morning Call. And my next price target is now down here at 1870 to the red line, which is a 200 period moving average at 1858. And that's the next sort of area of support to watch out for for the price of gold. And if you're short on this, your stock goes above the 1950 level with a view to taking that further on down. So, gold suffering at the hands of the stronger dollar.

US stock indices rebounded overnight, supported by the release of robust US economic data that eased slowdown concerns. Find out below what comes next. Source: Bloomberg Indices Stock market index S&P 500 Dow Jones Industrial Average United States Federal Reserve Tony Sycamore | Market Analyst, Australia | Publication date: Wednesday 28 June 2023 US stock indices rebounded overnight, supported by the release of robust US economic data that eased slowdown concerns. With two full trading sessions left to go, the Nasdaq is up 4.85% in June and 13.39% for the June quarter, building on a 20.5% gain in the March quarter. The S&P500 is up 4.71% in June and 6.51% for the June quarter. The perennial underachiever, the Dow Jones, is up 3.9% for the month and 1.96% for the quarter. Behind the bumper performance in US stock indices this month and this quarter, the earlier-than-expected resolution to the debt ceiling saga played its part, as did signs of cooing inflation which allowed the Federal Reserve (Fed) pausing of its rate hiking cycle. Topping it off, the chase for mega tech/AI stocks continued for names including Nvidia, Apple, Tesla, Microsoft, Google, and Amazon. Aside from possible month-end and quarter-end rebalancing flows, the next critical events for US stock indices are a speech by Fed Chair Jerome Powell this evening and the Core Personal Consumption Expenditure (PCE) price index release on Friday night. For those wondering when the rally in US stock indices might end, remember that July is seasonally the strongest month of the year. Over the past ten years, the S&P500 has had an average return of 3.27% in July. For the Nasdaq, it’s even better, with an average return of 5.06% in July over the past ten years. S&P500 Technical Analysis In our last update here, we outlined some potential support levels where a correction in the S&P500 might find support. Despite the volatility that month-end and quarter-end rebalancing can create, the pullback from the 4493 high is viewed as a correction rather than a reversal. As such, we continue to highlight the August 4325 high and then the 4250 level as support areas where buyers will likely emerge, looking to position for the next leg higher towards 4600. Aware that only a sustained break below support at 4165 (SPX) and 4180/70 in the continuous futures contract would negate the positive medium-term outlook. Source: TradingView Nasdaq Technical Analysis In line with the view above, the pullback from the 15475 high is viewed as a correction rather than the start of a reversal lower. As we have noted frequently in recent months, the pursuit of Tech/AI-related stocks is expected to remain a driver of the Nasdaq in the months ahead, with AI technology still too early in its lifecycle to disappoint relative to lofty expectations. As such, we expect dip buyers to emerge towards a band of support at 14,500/14,250 and again at 14,000. Source: TradingView Dow Jones Technical Analysis No change - the December 34,712 high remains the last band of resistance preventing the Dow Jones from setting up a test of the 35,492 high (from April 2022) before a run at the all-time 36,952 high. Until that occurs, the Dow Jones will likely continue to flounder in the shadows of the S&P500 and the Nasdaq. On the downside, the Dow Jones is expected to continue to find good support, initially at 33,500 and then from the 200-day moving average, currently at 32,808. Source: TradingView

Charting the Markets: 28 June IGTV’s Jeremy Naylor is joined by Serge Berger from TheSteadyTrader.com who shows us how things have worked against us in the first half and how we should be positioned going into the end of period. Jeremy Naylor | Analyst, London | Publication date: Wednesday 28 June 2023 Then, as he points out, look for a potential uptick in volatility when the expiration of futures and options fall shortly afterwards. We look at the S&P 500 and Brent, and ask the question how long can we stay long USD/JPY? This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Early Morning Call: AUD falls are inflation slows; RBA unlikely to hike The Australian dollar has dropped nearly 4% against the US dollar. Jeremy Naylor | Analyst, London | Publication date: Wednesday 28 June 2023 The Australian dollar Since hitting a four-month high a couple of weeks ago, the AUD has dropped nearly 4% against the USD. Australia's monthly consumer price index (CPI) indicator, another measure of inflation in the country, slowed to a 13-month low. It came in at 5.6% for the first five months of the year compared to the same period a year ago, lower than forecast and down from 6.8% in April. AUD/USD AUD/USD dropped to a three-week low as the odds of a Reserve Bank of Australia (RBA) rate hike have scaled back slightly after the data release. Markets now see a 30% probability of a 25 basis-point hike in July and estimate that rates are more likely to peak at 4.35% rather than 4.6%. China overview In China, profits earned by industrial firms dropped by 18.8% in the first five months of 2023 compared to a year earlier. Profits shrank at both state-owned firms by 17.7% and in the private sector by 21.3%. Credit Suisse Bloomberg reported yesterday, after the European market closed, that UBS is looking to cut more than half of Credit Suisse's workforce next month. Eventually, the Swiss bank intends to reduce the total combined headcount by about 30%, or 35,000 people. Credit Suisse currently has about 45,000 employees. This report follows comments from UBS CEO Sergio Ermotti last month. He warned of painful decisions about job cuts without giving details about the number of potential layoffs. Micron Technology Micron Technology is set to report on Wednesday after the bell. Wall Street expects the Chipmaker to lose $1.59 per share on revenue of $3.67 billion. This compares to the year-ago quarter, when earnings came to $2.59 per share on revenue of $8.64 billion. Since the beginning of the year, Micron shares have been rising, following a difficult 2022 where the stock lost half of its value. Micron benefited from an improved outlook for the chip sector. Oil overview Oil prices fell more than 2% on Tuesday. Investors are concerned that central banks may not be done with interest rate hikes. Yesterday, European Central Bank (ECB) president Christine Lagarde confirmed that "unless there is a substantial change in the inflation outlook," the central bank will "continue to raise rates in July" and thereafter "as far as needed." In the US, consumer confidence rose to an 18-month high this month, suggesting the Federal Reserve will likely have to continue raising interest rates to slow demand. Last week, Jerome Powell said the market should expect two more rate hikes by year's end. Today, The Fed chairman is due to talk at the ECB forum in Sintra. The application programming interface (API) inventory data had no impact whatsoever on oil prices. Crude stocks fell by about 2.4 million barrels. Gasoline inventories fell by about 2.85 million barrels. Distillate stocks rose by about 800,000 barrels. Sugar overview For the past couple of weeks, sugar prices have dropped by about 10%, reacting to favourable weather in Brazil, which paves the way for a quicker and larger harvest this season. Brazil's sugar output was up 18% in the first half of June, while sugarcane yields rose 26%, signalling a possibly larger crop. A relief for the market that saw sugar prices rally to an 11-year high in April. At that point, traders were concerned about tighter global supplies. At the end of April, India signalled a drop in production, and India's Food Secretary warned that sugar exports would be restricted. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Market participants seem to take comfort in a series of stronger-than-expected economic data out of the US, with economic resilience being the takeaway and calmed some nerves for an impending recession. Source: Bloomberg Yeap Jun Rong | Market Strategist, Singapore | Publication date: Wednesday 28 June 2023 Market Recap Overnight, market participants seem to take comfort in from a series of stronger-than-expected economic data out of the US, with economic resilience being the takeaway and calmed some nerves for an impending recession. A pull-ahead in US durable goods (1.7% versus -1% expected), rebounding consumer confidence (109.7 versus 104 expected) and surging new home sales to its highest in more than a year were all well-received by Wall Street, with traction returning to mega-cap tech stocks (DJIA +0.63%; S&P 500 +1.15%; Nasdaq +1.65%). While economic resilience can build the case for tighter monetary policies, rate expectations thus far remain well-anchored for an impending end to the Fed’s tightening next month, with confirmation to be sought from the US core PCE price index later this week. The day ahead will leave comments from central bankers on watch once more, notably from US Fed Chair Jerome Powell. Little deviation from his comments last week seems likely, but nevertheless, his views on how recent US economic strength may raise the odds of rate hikes will be on watch. Treasury yields were broadly higher overnight, which kept non-yielding gold prices on the backfoot (-0.6%). The US dollar weakened, with a failure to cross above the key 50 level for the Relative Strength Index (RSI) pointing to some exhaustion in buyers. Brent crude prices may be on the radar. Having traded within a consolidation pattern over the past two months, prices are seemingly heading back to retest its lower bound once more at the US$71.30. The level has aided to support prices on at least four previous occasions, but multiple retests of support within a relatively short period of time may raise the chances of a downward break. Any breakdown of the level could mark a new 2023 low and leave the US$65.70 level on watch next. Source: IG charts Asia Open Asian stocks look set to tap on the relief in Wall Street for a positive open, with Nikkei +0.77%, ASX +0.45% and KOSPI -0.04% at the time of writing. The Nasdaq Golden Dragon China Index was up more than 3% overnight, mirroring the strength in Chinese equities in the earlier session. With reopening optimism faded, sentiments are now highly sensitive to any prospects of government's stimulus policies ahead. Reassuring comments from China’s premier Li Qiang of a stronger second-quarter gross domestic product (GDP) growth and reaching its 5% growth target for 2023 provided that cue yesterday, although whether gains are sustained will still revolve around any concrete details in the policies. The key focus will be on the Australia’s monthly Consumer Price Index (CPI) indicator today. Despite a surprise rate hike from the Reserve Bank of Australia (RBA) early this month, follow-up minutes state that the recent rate decision was “finely balanced”, which seem to put some reservations behind the decision. Following the upside surprise in inflation back in April, market participants will be looking for any progress in its inflation fight. Current expectations are for a 6.1% read from previous 6.8%, and matching expectations may point to a new 12-month low in inflation, which may weigh on AUD while supporting the ASX. On the weekly chart, the AUD/USD remains weighed below its Ichimoku cloud pattern, failing to cross the upper edge of the cloud for the third occasion last week. The lower highs seem to put a downward trend in place for now, with the pair having to reclaim the 0.693 level to indicate a potential shift in trend and provide some conviction for the buyers. Source: IG charts On the watchlist: USD/CAD stays resilient on lower-than-expected Canada’s inflation Despite some weakness in the US dollar, the USD/CAD has held up well overnight (+0.4%), supported by a lower-than-expected core inflation print in Canada. The moderation to 3.7% from previous 4.1% indicates further progress from tighter monetary policies, while the headline came in softer at 3.4% versus the previous 4.4% as well. The data marked the six consecutive month of downside surprise in the core reading, which may weaken the case for more rate hikes needed. On the technical front, a bullish crossover on MACD and short-term bullish divergence on the RSI points towards building upward momentum, but having broken below its long-ranging pattern two weeks back to form a new nine-month low, greater conviction may have to come from a move back above the 1.326 level. Overcoming this level may support a move towards the 1.350 level. On the downside, the 1.308 level may serve as the next near-term support on watch. Source: IG chart Tuesday: DJIA +0.63%; S&P 500 +1.15%; Nasdaq +1.65%, DAX +0.21%, FTSE +0.11%

The Nasdaq100 has led global equity markets higher in the first half of 2023, but what happens next for technology heavy US index? Source: Getty Images Indices Shares Stock market index Nasdaq Nasdaq-100 Stock Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Tuesday 27 June 2023 Nasdaq 100 outperforming in 2023 Source: IG After a year of underperformance in 2022, Nasdaq100 gains in in 2023 (albeit off a lower base) have dwarfed that of global equity index peers (excluding the Nikkei). As of the 26th of June 2023, the Nasdaq100 had added more than 35% year to date, with only gains in the Nikkei (+26%) tracking similar in size. Why is the Nasdaq 100 trading higher in 2023? The Nasdaq’s return to favour in 2023 has been swift. Initial gains might have been attributed to a perceived value in the index after its stark relative underperformance in 2022. This would have found some increased appeal through sector rotation out of index peers the SP500 and Dow Jones Industrial Average which carry exposure to what has been a worrisome US banking sector this year. The Nasdaq 100 contains zero exposure to the US financial sector and roughly 60% exposure to the technology sector. Gains have then been further exacerbated by enthusiasm in cloud computing and hype around artificial intelligence (AI). These technology-driven industries are poised to transform the way we live and work, and investors are keen to be a part of this revolution. As such, companies like Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) which provide major weightings to the Nasdaq have seen their stock prices soar, contributing to the index's stellar performance. Broader equity market gains have also found a catalyst in the suggestion that inflation has started to turn the corner and that rates could be nearing the top of their current cycle, and at the very least not become too much more restrictive than they are right now. Which companies are leading gains on the Nasdaq 100? The market breadth for the Nasdaq 100 has been supportive with 77 of the 101 (in you include both (Alphabet listings) constituents trading in positive territory for the year to date. Top gainers on the index for 2023 include Nvidia (+188%), Meta Platforms (Facebook) (+139%) and Tesla (+108%). Is the Nasdaq 100 a buy at current levels? The index currently pirouettes on a historical price-to-earnings (P/E) ratio of around 35 times, a valuation that treads closer to the last decade's high (41 times) than the decade low (15.8). This suggests that the Nasdaq 100 is relatively expensive at current levels, making some traders hesitate to jump into the fray. Yet, it is essential to remember that the underlying earnings of major Nasdaq 100 constituents, like Apple Inc. (AAPL) and Amazon.com Inc. (AMZN), have started to rise. High valuations on growth-oriented companies are common, especially when they are driven by powerful forces like artificial intelligence (AI) and cloud computing. These technological themes are firmly in favor right now, supporting the appetite for investment in the index. However, short-term gains have accelerated to a point where a healthy correction may be on the horizon. Investors and traders might prefer to bide their time, waiting for an opportunity to buy into a correction of the longer-term uptrend (should it occur). Nasdaq100 – Midyear technical outlook Source: IG The Nasdaq100 has started to pullback from the 15300-resistance level and overbought territory. The short term move lower suggests a correction of the longer-term uptrend which remains in place as we see the price still trading firmly above the 200-day simple moving average (blue line) (200MA). Trend followers might wait to see the short-term correction play out before looking for long entry. Long entry might be considered on a bullish price reversal closer to one of the labelled support levels (14285 initially) on the chart above. A retest of the 15300-resistance level is favoured as we move further into the year. A break above this level (confirmed with a close above) could start paving the way for the index to start moving back towards the highs considered between levels 16670 and 16750 respectively. Only on a move below the 200MA would we reassess the currently assumed long term upward trend bias for the index.

Certainly, the recent rally that’s seen Tesla shares more than double since the start of the year would appear to be over. Jeremy Naylor | Analyst, London | Publication date: Tuesday 27 June 2023 The rally took the shares to the trillion dollar level, prompting some analysts to question its valuation and downgrade the stock. IGTV’s Jeremy Naylor takes a look at levels to watch out for as the MACD turns over. (Video Transcript) Tesla shares rally So it seems that the stunning rally in Tesla shares may finally be over. Certainly for the time being, at least, the rally took the shares to the trillion-dollar level, prompting some analysts to question the valuation and coming through with a downgrade in the stock, which is what we saw yesterday coming through on the Tesla stock from Goldman Sachs. Share price chart I want to show you the share price chart because we've seen some relatively hefty candles on the way down. This blue box represents the move that we've seen since the beginning of the year. In fact, the year started negatively, but we've been up 127% since the very first trade in 2023, up to the recent highs that we've seen in the stock, taking us up to those highs on the 21st of June. Since then, there's been a little bit of air taken out of the tyres of Tesla stock. Yesterday, Goldman Sachs cut the hold equivalent rating, joining Morgan Stanley and Barclays, which downgraded the stock last week. Brokerages, however, have said that they will raise their price targets to reflect the momentum in Tesla shares. But all those price targets are below where we are. The MACD I wanted to show you this because I think there are a couple of interesting things happening here. We've got this coming together of all these moving averages: the 50, 100, and 200-period moving averages; the 50 is now going above the 200-period moving average. There's this death cross that we've seen in this stock. And that coincides as well with what we've got here down to the bottom with the MACD, the moving average convergence divergence indicator, something that I follow a lot of. When you get this passing in this direction, this is on the way down, obviously with the blue line coming in now down below the red dotted line, which gives us a little bit of a red histogram down here. When you see that crossover happen, look what happens. The stock you see declines every time it happens; declines come through it every time. This is always the case. So the big question is: how much further down can Tesla stock go? Certainly, we've seen a tremendous rally this year. As I said, it has more than doubled in stock since the beginning of 2023. And people think it's time to sell stock. That's what they're doing at the moment. 240, 77. This is an all-session stock, like 9:00 this morning on the platform.

After Wagner’s weekend getaway in Russia, commodity traders may wish to prepare for peace in Ukraine. Source: Bloomberg Forex Shares Commodities Russia Ukraine Wheat Charles Archer | Financial Writer, London | Publication date: Tuesday 27 June 2023 Lenin once noted that ‘there are decades where nothing happens; and there are weeks where decades happen.’ In this instance, it didn’t even last a weekend. On Saturday, Prigozhin and his Wagner band of mercenaries came close to accomplishing that which evaded both Napoleon and Hitler; seizing Moscow, coming within 120 miles of Russia’s capital city before calling off the ‘coup.’ It’s worth noting that the Russian state has faced collapse on several occasions before; the Tsars were ended within hours in 1917, while a three-day-long coup by the KGB finished the Soviet Union in 1991. While war in Ukraine rages on and Putin remains President of Russia, most analysts consider that the Russian regime has at the very least been weakened. Preparing for an end to the war in Ukraine — and like all wars, the fighting will eventually subside — makes good sense. Of course, companies with operations in Russia and Ukraine including Ferrexpo and Polymetal could well benefit, and the Russian Rouble may see a boost as the end of the war could spell the end of two-way economic sanctions. However, it’s the commodities market that could most likely see rejuvenation — with prices falling in the event of a brokered peace and rising in the event that the war ends in chaos. This is largely due to Russia’s size and geographical spread; it remains a commodities superpower. Russian peace? Oil, gas and wheat prices When the invasion of Ukraine commenced on 24 February 2022, the commodities markets went haywire. Much of the attention went to oil and gas — Brent Crude soared above $120/barrel and European natural gas prices rocketed to unsustainable levels — driven by sanctions on Russian energy exports. Should peace be agreed, both commodities could fall sharply; of course, a violent breakdown of the Russian state could have the opposite effect. But Russia and Ukraine are much more than oil and gas. Perhaps the second-most notable commodity is Wheat. Ukraine’s national flag signifies a field of wheat under a blue sky, and together with Russia, the ‘breadbasket of Europe’ generates circa 30% of global production. Exports are so critical that this commodity is subject to a UN and Turkey-brokered deal between the two enemies, termed the ‘Black Sea Grain Initiative,’ to allow for safe export of wheat and ammonia fertiliser. Despite the hostilities, this deal has been ongoing since July 2022. But an end to the war could see wheat prices fall substantially, even after having fallen back to pre-war prices. As a knock-on, pork prices could also fall as wheat is a key ingredient in pig feed — but of course, any falls in wheat would take time to feed through to Lean Hogs, potentially creating trading opportunities. Ukraine War: critical minerals Russia is also the sixth-largest exporter of Gold, accounting for 4.4% of global supply and also 3.5% of global Copper exports. Gold stands near a record high due to its status as a safe haven in times of inflationary economic stress, while the copper supply gap has been covered extensively. Peace could see new investment into the country to increase these exports. Then there’s the critical minerals — Russia is the second-largest exporter of cobalt, a key ingredient of rechargeable batteries — and is also the second-largest exporter of vanadium. It’s also responsible for circa 10% of the world’s Nickel supply, mostly through Nornickel. It’s worth noting that nickel has seen seriously volatile trades over the past year, including one instance when it soared by 250% in a single day, with the London Metal Exchange even suspending nickel trading for hours at a time. Russia also exports circa 12% of the world’s Platinum and is additionally the fourth-largest exporter of tungsten. Then there’s Palladium — essential to car catalytic converters and semiconductors — Russia produced 40% of palladium globally in 2021, representing some 2.6 million troy ounces, with Nornickel responsible for much of this as the metal is a by-product of nickel. Penultimately, it’s worth considering Aluminium — Russia is the world’s second-largest exporter, having exported $7.42 billion of the metal in 2021 alone. 220,575 tonnes, or 53%, of the aluminium currently in LME warehouses originated in Russian, with companies taking delivery of contracted aluminium but refusing to use it and instead storing it. Peace could see this stockpile used up and demand fall in the interim. Notably, Russia’s Rusal remains the largest aluminium exporter outside of China. The final key commodity for traders to consider is uranium. While the reactive substance cannot be traded directly, Yellow Cake indirectly offers exposure to uranium’s price. State-owned Rosatom currently accounts for 35% of global uranium enrichment, and Russia itself accounted for 16.5% of uranium imported into the US in 2020. Demand for the commodity is rising, especially as states look for energy independence and climate change solutions. Cessation of sanctions could see this source of uranium unplugged and the price fall. Oil, gas, wheat, lean hogs, gold, copper, cobalt, vanadium, nickel, platinum, tungsten, palladium, aluminium, and uranium; Russia touches on virtually every important commodity on the market today. The eventual end of the Ukraine War will affect them all. And while the price direction cannot be guaranteed, volatility — and trading opportunities — seems all but certain.

Wall Street added to recent losses overnight, as the moderation from previous overbought technical conditions and extreme bullish sentiments continues. Source: Bloomberg Forex Indices European Central Bank EUR/GBP Euro Inflation Yeap Jun Rong | Market Strategist, Singapore | Publication date: Tuesday 27 June 2023 Market Recap Wall Street added to recent losses overnight (DJIA -0.04%; S&P 500 -0.45%; Nasdaq -1.16%), as the moderation from previous overbought technical conditions and extreme bullish sentiments continues. Amid the relatively quiet US economic calendar to start the week, a series of downgrades in the technology space such as Alphabet and Tesla seem to take on much focus, triggering some profit-taking from its recent stellar outperformance. Market participants rotated into value sectors, with strength in real estate (+2.2%) and energy sector (+1.7%). The VIX is also up 6% as a sign of increased hedging activities on renewed caution. The day ahead will leave comments from European Central Bank (ECB) President Christine Lagarde on watch. Recession talks are were amplified yesterday with a lower-than-expected read in Germany IFO business climate index (88.5 versus 90.7 forecast) and its second straight month of decline, but she is likely to join the hawkish chorus from central bankers in terms of monetary policies. Canada’s inflation data is lined up on the economic calendar, with expectations for further progress to be made in its inflation fight. US durable goods orders and consumer confidence data will also be in focus tonight to provide further clues on soft-landing chatters. Following a 10% rebound over the past month, copper prices are facing strong resistance at the US$8,600/tonne level, where a previous support-turned-resistance stands in line with the upper edge of the Ichimoku cloud on the daily chart. A bearish crossover on moving average convergence/divergence (MACD) points to a reversal in momentum as the relative strength index (RSI) flirts with the key 50 level. China’s Purchasing Managers' Index (PMI) data will be released this week, and given that any positive impact from recent round of monetary easing measures may come with some lag, another set of lacklustre readings in its June PMI remains on the table. Source: IG charts Asia Open Asian stocks look set for a mixed open, with Nikkei -0.54%, ASX +0.39% and KOSPI -0.34% at the time of writing. Chinese equities saw some slight resilience overnight, with the Nasdaq Golden Dragon China Index eking out a 0.2% gain despite the downbeat Wall Street performance. For the Nikkei, the 20-day moving average (MA) has given way, which is a key MA line supporting the index on at least four occasions over the past two months. As the index continues to moderate from overbought technical conditions, further downside may leave the 31,500 level on watch next, where previous dip-buying efforts were sighted in early-June. Source: IG charts Closer to home, Singapore’s industrial production painted a gloomy growth outlook, with its eight straight month of contraction. The degree of underperformance is significant as well, with production down 10.8% year-on-year versus an expected 7.4% contraction, tracking a similar decline in its non-oil domestic exports. The electronics segment continued to be a drag on growth, contracting 23% from a year ago and accounting for 45% of the overall manufacturing sector. Being highly sensitive to external demand, a low-for-longer growth outlook for Singapore seems to be the takeaway, with a dimmer economic outlook and a global tech downcycle at play. On the watchlist: EUR/GBP attempting to defend key support Having broken above a near-term descending wedge on the daily chart last week, buyers are now attempting to defend a key support at the 0.857 level, as revealed in the formation of a bullish long-legged doji overnight. That said, more clarity awaits, with its RSI still trending below the key 50 level while its 20-day MA is standing in the way as immediate resistance. Policy divergence remains the key driving force for the pair, as UK inflation not moderating as quickly as the Eurozone suggests that more hawkishness is being priced for the BoE as compared to the ECB. Comments from ECB President Christine Lagarde will be on the radar later today. Failure to defend the 0.857 level over the coming days may point to some exhaustion, which may pave the way to retest the 0.840 level next. Source: IG charts Monday: DJIA -0.04%; S&P 500 -0.45%; Nasdaq -1.16%, DAX -0.11%, FTSE -0.11%

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Early Morning Call: Supermarket price inflation slows in June, food inflation still up YoY Britain is facing stubbornly high inflation that will take longer to fall. Jeremy Naylor | Analyst, London | Publication date: Tuesday 27 June 2023 US equity markets US equity markets fell on Monday, led by technology stocks. Amazon, Nvidia, and Meta fell in excess of 3%. Tesla was among the worst performers after Goldman Sachs downgraded the stock to neutral. Global consulting firm AlixPartners released its 2023 Global automotive outlook. The auto industry must "radically" change if it wants to compete with Chinese players, according to the report, Chinese brands are "poised to become the shaping force of the global automotive industry in the coming years." UK inflation Last week, the Bank of England (BOE) surprised investors by raising interest rates by 50 basis points, taking its main rate to 5%. The argument was simple: Britain is facing stubbornly high inflation that will take longer to fall. Since then, Reuters has run a poll and the verdict is that a majority of economists now think the Bank of England will deliver a further 50 basis points during the next quarter, in the form of two hikes of 25 basis points each at its August and September meetings. In a previous poll made only two weeks ago, policymakers were expected to draw a halt at 5.00% next quarter. Canadian consumer price index In Canada, the consumer price index (CPI) is expected to rise 3.4% in May year-over-year (YoY) after a 4.4% increase in April. Core CPI is also forecast to decelerate to 3.9%, which is higher than the headline figure, signalling that broader inflation is taking more time to cool down. Which is a point that really preoccupies the Bank of Canada. At its last meeting, Tiff Macklem's team unexpectedly raised the target for its overnight rate by 25 basis points to 4.75%. Policymakers were then concerned that inflation could get stuck materially above the 2% target and said they would continue to assess the dynamics of core inflation. Cruise Line Will Cruise Line carnival's shares recover on the London stock exchange on Tuesday? Cruise Line operators suffered a loss of value on Monday after Carnival forecast third-quarter profit largely below estimates. These disappointing expectations are not due to a drop in demand but to stickier-than-expected inflation. Port expenses, freight, crew travel, and elevated labour costs have all pushed the company to raise its cost outlook. Norwegian Cruise Line's stock fell as much as 6.4%. Carnival's US stock ended well off the lows, and Royal Caribbean Cruises also recovered. Walgreens Boots Alliance Walgreens Boots Alliance is due to report its quarterly earnings before the market opens. The Street expects earnings of $1.07 per share on revenue of $34.2 billion. Investors are waiting for an update on the future of Boots. It all started three months ago, when it was reported that investors and board members were pushing for a breakup of the global pharmacy business to refocus on the group's domestic market. Boots have had a number of owners through the years. It was established in 1849 and has been part of Walgreens since 2012. This would be the second time Walgreens has tried to sell the UK chain. It tried 18 months ago, with a price tag of $7 billion, but the sale was called off in June last year after failing to find a suitable buyer. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Charting the Markets: 26 June FTSE 100, DAX and S&P 500 try to find support. : EUR/USD mixed, GBP/USD recovers while USD/JPY trades near 7-month high. And Gold edges higher but oil and coffee prices remain under pressure. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 26 June 2023 This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Last Friday brought another downbeat session in Wall Street, with the S&P 500 adding to recent losses to close 1.4% lower for the week. Source: Bloomberg Indices Commodities Personal consumption expenditures price index Natural gas Relative strength index Gas Yeap Jun Rong | Market Strategist, Singapore | Publication date: Monday 26 June 2023 Market Recap Last Friday brought another downbeat session in Wall Street, with the S&P 500 adding to recent losses to close 1.4% lower for the week. Nevertheless, the index is still up 4% for the month. On the economic calendar, areas of weaknesses in the global economy continue to be presented with a series of lower-than-expected flash Purchasing Managers' Index (PMI) readings from major economies. Notably in the US, flash manufacturing PMI remains in contractionary territory (46.3 versus previous 48.4) while the services sector saw a moderation in growth (54.1 versus previous 54.9) for the first time in six months. Ahead, market participants may be keeping an eye on any further developments around the mercenaries’ uprising in Russia but having chosen to stand down, the mercenaries have already given up their initial advantage of the surprise element in a rebellion, which reduces the chances of further escalation. The potential risks to watch may be on any renewed opposition from the Russian public to Putin’s leadership, especially with the Ukraine war being the agenda for the movement which has not been well-received by the public previously. The week ahead will bring focus to China’s PMI readings as well, with market participants hoping to seek for any pockets of resilience in the China’s recovery story. The US core PCE price index will also be in focus. Three months of no-progress may explain the +0.3% upward revision in the Fed’s 2023 core PCE projections (3.9% versus 3.6% in March) at the latest FOMC meeting, therefore a softer inflation read will be looked upon to provide room for the Fed to deliver a prolonged pause in July. The US dollar has been attempting to stay above its Ichimoku cloud on the daily chart but a move back above the 103.12 level may be warranted to provide greater conviction for the bulls. For now, its Relative Strength Index (RSI) still hangs below the 50 level while a flat-lining MACD points to a near-term consolidation. The recent CFTC data revealed that the dollar's aggregate positioning against G10 currencies has seen a renewed build-up in net-short positioning last week, following four weeks of unwinding. On the downside, the 100.50 level, which marks multiple bottoms year-to-date, may be on watch. Source: IG charts Asia Open Asian stocks look set for a mixed open, with Nikkei -0.16%, ASX -0.37% and KOSPI +0.19% at the time of writing. Chinese equities remain under pressure lately, with the Hang Seng Index unwinding all of its past two weeks’ gains upon a retest of the upper edge of an Ichimoku cloud resistance on the weekly chart, which may reveal its significance as a key level for sellers. The economic calendar is relatively quiet in the region, with Thailand’s trade data and Singapore’s industrial production. Having seen the 8th straight month of contraction in Singapore’s exports, production may track the overall weakness with expectations for a deeper year-on-year contraction to -7.4% from previous -6.9%. The Straits Times Index continues to trade within a symmetrical triangle pattern, with the index heading back to retest the lower trendline for the fourth occasion since the start of the year. Any breakdown of the lower triangle trendline could leave the March 2023 bottom on watch at the 3,100 level. Source: IG charts On the watchlist: More signs of life in natural gas prices with push to three-month high After plunging as much as 78% since August 2022, natural gas prices have been largely forming a base over the past months, which suggests that selling pressure may be exhausted for now. Hotter-than-usual global temperatures increasing electric use and lower-than-planned supply in Norway’s gas output have been on the radar, with natural gas prices heading to its three-month high to end last week. On the technical front, the RSI maintains above its key 50 level, with the recent formation of higher highs and higher lows supporting a near-term upward bias. The 3.05 level may be on watch next, with any move above this level suggesting a break of its ranging pattern and provides further validation of buyers taking control after a months-long period of indecision. On the downside, a series of support lines will be on watch, which includes its Ichimoku cloud support and its 50-day MA. Source: IG charts Friday: DJIA -0.65%; S&P 500 -0.77%; Nasdaq -1.01%, DAX -0.99%, FTSE -0.54%

The S&P 500’s 2023 growth appears dependent on slowing rate rises and AI advances. But with high inflation seemingly implacable, the FTSE 100 seems similarly uncertain. Source: Bloomberg Forex Indices Shares FTSE 100 Inflation S&P 500 Charles Archer | Financial Writer, London | Publication date: Friday 23 June 2023 The FTSE 100 was the index star performer of 2022, rising by 1% in the year while its transatlantic counterpart, the S&P 500, fell by nearly 20%. Bear in mind, this performance excludes the FTSE’S 4.2% dividend yield, which puts even more water between the two. The year was marked by surging inflation and monetary tightening; excellent news for the London index which remains chock-full of bankers, miners, and oil majors, but less fruitful for the big tech stocks of the US index which rely on the water of cheap money for explosive growth. 2023 has seen a return to form — the FTSE is broadly flat, while the S&P 500 has risen by 13.9% year-to-date and is now in a bull market when considering its October 2022 lows. But these macro performances hide some problems that may be bubbling just under the surface. S&P 500 market bubble The Federal Reserve finally issued a ‘hawkish pause’ on raising rates last week, leaving the benchmark rate at a target range of between 5% and 5.25%. With US CPI inflation down from a high of 9.1% to just 4.0%, the Reserve has indicated that just two more quarter-point hikes are likely to take place in 2023, stating that ‘holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy.’ With inflation now less than half that of the UK and the end of the rate hike cycle in sight, the key US tech shares which drive the S&P 500 have rebounded. This movement has been encouraged by the AI effect — having left disruptive tech, blockchain, Web3, crypto, and the metaverse behind — investors seemingly have a new favourite buzzword to throw investing cash at. For context, Mistral AI — at just four weeks old — managed to raise $113 million, despite having no product and simply because the founders previously worked Alphabet’s DeepMind and at Meta Platforms. The start-up plans to challenge ChatGPT — whose owner OpenAI has enjoyed a $10 billion investment from Microsoft —and Bard in the text-based generative field, demonstrating that investors are still prepared to stump up for potentially explosive growth. However, it’s worth taking a step back. The US economy has been hammered by inflation and rate rises, and the AI effect may be just as short-lived as the previous buzzwords. For context, the index remains top-heavy with the ‘big seven’ tech shares — Nvidia, Apple, Tesla, Microsoft, Alphabet, Meta, and Amazon — having contributed the entirety of the 13.9% growth in 2023. Excluding these seven for the so-called ‘S&P 493’ would leave the index flat for the year. Tesla and Nvidia have together increased in value by over $1.1 trillion in less than six months; and Nvidia now sports a giddy price-to-earnings ratio of 224. Apple's price-to-earnings ratio stands at just 32. The index may be back in bubble territory, especially if rates continue to rise further than is currently anticipated. FTSE 100 dangers While the FTSE 100 is often dubbed the bellwether of UK economic performance, this epithet could be more accurately attributed to the domestically focused FTSE 250. For perspective, FTSE Russell data indicates that circa 82% of FTSE 100 companies’ income is derived from overseas. However, even the domestically focused FTSE 100 stocks may soon start struggling. Housebuilders including Persimmon are being dragged down by concerns over a house price crash and affordability concerns, especially after the end of Help to Buy. And according to Exane BNP Paribas analyst Guy Stebbings, the FTSE 100 banks — and especially NatWest — may soon find that ever higher rates could start hurting, rather than helping, their prospects. He notes that the banks are ‘back in the danger zone. Higher rates lift bank earnings but at a certain level this equation breaks down...we are well past this point.’ The base rate is now at 5%, while CPI inflation remains stubbornly high at 8.7%. The markets are now pricing in an increase of the base rate to a terminal 6.25% — but dependent on sticky inflation, even this estimate may be optimistic as core rose from 6.8% to 7.1% last month. As the UK base rate continues to rise even as US rate rises have been paused, it’s causing sterling to strengthen against the US dollar. For context, £1 bought $1.08 in late September 2022 after the Truss mini-budget debacle — this is now up to $1.27. For BP, Shell, Glencore and Rio Tinto, alongside most FTSE 100 stocks, this constitutes a revenue problem. As previously noted, these companies generate their income predominantly from overseas, and often in dollars; they then report in sterling. A stronger pound therefore weighs on the UK’s premier index. And if the anticipated global recession kicks in — with the UK suffering from higher inflation than the rest of the developed world — the FTSE 100’s oilers and miners could struggle to maintain their financial health. For long-term index investors, it’s worth noting that both the S&P 500 and FTSE 100 have delivered positive returns over the decades. But there are always spikes and dips in this time, and past performance is no guarantee of future success.

Early Morning Call: FTSE 100 rebounds after a week of declines; AB Foods and Aston Martin in focus Europe's equity markets opened higher on Monday after a week of heavy losses. Jeremy Naylor | Analyst, London | Publication date: Monday 26 June 2023 09:29 Europe's equity markets Europe's equity markets opened higher on Monday after a week of heavy losses. The German DAX lost 3%, posting its worst week in three and a half months. This Monday, the Germany index could react to the Information and Forschung (Ifo) business climate survey. It is expected to fall to 90.7 in June from 91.7 the previous month, a second straight month of declines. Like in May, the current situation and expectation components are forecast to fall. More hurdles are lined up this week: the Gfk consumer confidence on Wednesday, June consumer price index on Thursday, and retail sales on Friday. AB Foods Associated British Foods raises its full-year profit outlook. The group reported group sales up 16% to £4.73 billion in the third quarter. Primark sales rose 13% to just under £2 billion, with like-for-like sales growth of 7%, supported by higher average selling prices. Associated British (AB) Foods now expects adjusted operating profit, its key profit measure, to be "moderately ahead" of the £1.43 billion made in 2021/22. Goldman Sachs Goldman Sachs announced after the close on Friday that it's just started cutting managing directors around the world as it cuts headcount amid a slump in Mergers and acquisitions (M&A) and from companies wanting to raise money. Bloomberg reported that Goldman Sachs will shed 125 managing director roles. Of the near 40,000 employees, Goldman doesn't report how many managing directors it has, although in 2021 it promoted 643 to MD roles; these roles also carry a partnership qualification. Goldman Sachs shares fell to a three-month low on Friday after CNBC reported the bank is likely to take a large writedown for its acquisition of fintech lender GreenSky Inc. Goldman Sachs has been running a sale process for GreenSky, acquired in 2021 for $2.2 billion, and may take a writedown on the $500 million of goodwill. Banking sector overview Goldman Sachs is not the only bank to cut jobs. JPMorgan Chase & Co. announced that it will end around 40 investment banking positions as part of its effort to cope with the global slowdown. Recently, Citigroup started cutting hundreds of jobs across the company this year and is planning to shed 30 investment banking jobs and 20 more at its corporate bank in London. The banking sector will be the centre of attention over the next few weeks. On Wednesday, the Federal Reserve (Fed) is due to release the results of its annual bank health checks after market close. The results dictate how much capital banks need to be healthy and how much they can return to shareholders via share buybacks and dividends. Banks aren't allowed to announce their plans for dividends and buybacks until typically a few days after the stress test results, but we can expect them at the latest when they publish their quarterly earnings in mid-July. US oil On the commodity market, Friday's Baker Hughes rig count saw six oil rigs taken offline as more oil field owners judged the market just wasn't priced high enough to pump. US oil rigs reached 546 this week, their lowest since April 2022. The number of gas rigs on production rose by six, keeping the total rig count steady at 687. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.

Fed Chair Jerome Powell reiterated his hawkish tone but Wall Street seems to be taking it in stride this time, with the S&P 500 and Nasdaq overturning their three-day losing streak. Source: Bloomberg Forex Indices Commodities United States dollar Currency Bank of Japan Yeap Jun Rong | Market Strategist, Singapore | Publication date: Friday 23 June 2023 Market Recap Fed Chair Jerome Powell reiterated his hawkish tone at the testimony to the Senate Banking Committee overnight, but Wall Street seems to be taking it in stride this time (DJIA -0.01%; S&P 500 +0.37%; Nasdaq 100 Index +0.95%), with the S&P 500 and Nasdaq overturning their three-day losing streak. Overnight economic data saw little surprise in US initial jobless claims, but the Conference Board Leading Economic Index may warrant some attention with its 14th straight month of decline. The steeper pace of decline over the six-month period between November 2022-May 2023 reflected that tighter policies are working its way through economic conditions, which kept rate expectations well-anchored for an impending end to the Fed’s hiking cycle. The upcoming economic challenges presented from the data put value sectors on the backfoot overnight, while the more economically-resilient megacap tech shined. Further Fedspeak are lined up on the economic calendar ahead, but could be largely a non-event with market participants accustomed to the Fed’s hawkish but data-dependent tone. A series of flash Purchasing Managers' Index (PMI) figures will be on the radar as well, with any signs of a soft landing on the lookout. Treasury yields moved higher overnight, which aided to firm up the US dollar (+0.4%) but weighed on gold prices (-1.0%). The yellow metal has pushed to a new three-month low, failing to hold above a key support confluence (upward trendline, Ichimoku cloud, 100-day MA). The formation of near-term lower highs and lower lows put a downward trend in place for now, with any subsequent break below the US$1,900 level potentially paving the way towards the US$1,868 level next. Source: IG charts Asia Open Asian stocks look set for a mixed open, with Nikkei +0.29%, ASX -0.56% and KOSPI -0.38% at the time of writing. Hong Kong markets will be back online today, while Mainland China share market remain closed for the Dragon Boat Festival. The economic calendar this morning saw a significant downside surprise in Japan’s headline inflation (3.2% versus 4.1% expected), but the core-core aspect continues to head higher to 4.3% from the previous 4.1%, with the mixed data likely to put the Bank of Japan (BoJ) on more wait-and-see in its policy-pivot plans. That is further supported by the downside growth risks presented in the au Jibun Bank PMI readings, with the manufacturing sector in contraction territory while lower-than-expected services PMI put some dampener on reopening optimism. The day ahead will leave Singapore’s consumer price index (CPI) in focus. With the Monetary Authority of Singapore (MAS) leaning towards a pause in its tightening stance since April this year, more evidence of moderating inflation will be needed to provide the conviction that a reinstatement in tighter policies is not needed. A downside surprise on that front may weigh on the SGD. The USD/SGD has been trading within an ascending triangle pattern over the past months, with the near-term higher lows revealing greater control from buyers. The flat upper trendline resistance may be in focus, with any subsequent move above 1.360 potentially paving the way to the 1.375 level next. The upward bias may remain, with a bullish crossover on moving average convergence/divergence (MACD), along with a steady sit above its Ichimoku cloud on the daily chart. Source: IG charts On the watchlist: USD/JPY heads above ascending channel pattern Having traded within an ascending channel pattern since the start of the year, a firmer US dollar overnight has allowed the USD/JPY to overcome its upper channel resistance, with a bullish crossover formed between its 100-day and 200-day moving average (MA). Widening yield differential between the US Treasuries and the Japanese Government Bonds (JGBs) remains a key driving force, with recent central banks’ updates continue to reinforce a Fed-BoJ policy divergence. The next level in focus may be the 145.00-145.80 range, as one mighty recall how the BoJ has intervened in the currency market at this level back in September 2022 by buying 2.8 trillion yen. Reaching that level may reignite some speculations that the central bank may step in once more, although past intervention attempts have not been always successful in supporting the yen over the longer term. On the downside, the 142.00 level will serve as an immediate support to hold, where the upper channel trendline stands. IG charts Thursday: DJIA -0.01%; S&P 500 +0.37%; Nasdaq +0.95%, DAX -0.22%, FTSE -0.76%

While the Fed has largely retained its hawkish tone at the latest meeting, speculations for a quicker policy shift from the BoJ have not been receiving much validation by policymakers thus far. Source: Bloomberg Forex Bank of Japan Japanese yen USD/JPY Central bank United States dollar Yeap Jun Rong | Market Strategist, Singapore | Publication date: Thursday 22 June 2023 Fed-BoJ policy divergence remains the key driving force While the Federal Reserve (Fed) has largely retained its hawkish tone at the latest meeting, speculations for a quicker policy shift from the Bank of Japan (BoJ) have not been receiving much validation by policymakers thus far. The persistent rise in Japan’s “core core” inflation to more than two-fold the central bank’s target (4.1% versus 2% target) has been an argument from the hawks , but considering that improving wage dynamics has not been broad-based, that has provided some basis for the BoJ to continue defending their stance of inflation being ‘transitory’. Source: Refinitiv Current interest rate futures remain well-anchored for the BoJ to leave interest rate unchanged at least over the next two policy meetings. Perhaps the greater focus will be on whether the central bank will exercise further tweaks to its yield curve control (YCC) policy, as markets have been highly sensitive to any slightest signs of policy normalisation from the central bank. That said, the BoJ has not been the best at communications. One may recall how the central bank threw markets off guard back in December 2022 with a surprise widening of its 10-year bond yield cap, dragging the USD/JPY down by 4.3% in a single day. With the still-ambiguous outlook on how the BoJ may normalise policies eventually, any tweaks will continue to come with an element of surprise. At least for now, the tone from the central bank seems to be pointing to more wait-and-see, which provides some runway for the Fed-BoJ policy divergence story to continue. How did past BoJ’s intervention play out? The BoJ has intervened in the currency market thrice last year, once in September 2022 by buying 2.8 trillion yen while selling the US dollar. The second and third occasions are on 21 and 24 October 2022, with an overall 6.3 trillion yen amount. While the October intervention has allowed the USD/JPY to find a top, recent resurgences in the pair seems to suggest that as long as the policy divergence remains, any impact from interventions could be temporary and unsustainable over the longer run. Thus far, policymakers’ concerns on the weaker yen have not been as prominent as it was last year. Recent comments from the BoJ Governor Kazuo Ueda also highlighted that focus is on the pace and timing of decline as compared to an absolute level, which may point to some acceptance for now. Technical analysis: USD/JPY closing in on BoJ intervention level back in September 2022 On the daily chart, the USD/JPY has been trading within a rising channel pattern since the start of the year, with a bullish crossover formed between its 100-day and 200-day moving average (MA). Despite the recent lacklustre performance in the US dollar, the pair has managed to hold up well, as the Fed-BoJ policy divergence remains the key driver. A bullish pennant has been presented lately, although in the near term, some indecision seems to be in place with a bearish divergence on the relative strength index (RSI). While the series of higher highs and higher lows continue to put an upward trend in place, immediate resistance may stand at the upper channel trendline, in coincidence with a 61.8% Fibonacci retracement level. Any upward break above the channel pattern may then leave the 145.80 level on watch next. To recall, the BoJ has intervened in the currency market at this level back in 22 September 2022, which could trigger concerns that the BoJ may step in once more. Source: IG charts

When asked yesterday to comment on the Fed's decision to keep rates steady last week, Jerome Powell said: "We didn't use the word pause and I wouldn't use it here today." Jeremy Naylor | Analyst, London | Publication date: Thursday 22 June 2023 The Fed chair added that a majority of policymakers see two more quarter-point rate increases as likely by the end of the year. In the meantime, a short USD trade seems to be the way to go. (Video Transcript) Fed decision Jerome Powell returns to Capitol Hill today to answer more questions from the US legislature about the US economy. When asked to comment yesterday on the Fed's decision to keep rates steady, Jerome Powell said, "last week, we didn't use the word pause, and I wouldn't use it here today." Let's take a look at what's been going on Inflation He said inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go. The Fed Chair added that a majority of policymakers see two more quarter-point rate rises likely by the end of the year. But despite the lowering of the consensus on inflation, opinions start to diverge about the need for and timing of additional interest rate rises. Jerome Powell was answering US lawmakers questions yesterday. Other Fed members were sharing their views as well. The Chicago Fed Let's take a look at a couple of these. The Chicago Fed president, Austan Goolsbee, said at a Wall Street Journal forum that he felt the central bank was in a wait and see mode. If you don't see progress, that is an offset. If you do see progress, that, too, is an answer. The Atlanta Fed The Atlanta Fed president, Rafael Bostic, also commented yesterday, now suggesting the Fed would need to wait at least until the July meeting to decide on further rate increases across the US economy. He says if we simply press on with additional rate rises, we could needlessly drain too much momentum from the U.S. economy. USD Let's take a look at the dollar basket. In today's session, we were trading at levels we've not seen since the 11th of May. This is money coming out of the USD, as we see in the second day of commentary from Jerome Powell today. Want to take a look at what's happening with the euro-dollar trade, because this is definitely a trade? We are down a little bit today. EUR/USD But if you are long on the EUR/USD the stock goes underneath this 50-period moving average down here at around the 1 to 870 level. We're trading at 1.984, and there is the potential, I think, to rise to some of the highs that we've seen. At one, 1096 was the high we had back on the 26th of April. If you're long on the EUR, if your long stock goes in fairly close underneath that, that will give you some protection.

Indices stay under pressure as UK inflation remains sticky Outlook on FTSE 100, DAX 40 and S&P 500 as UK inflation comes in higher-than-expected. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 21 June 2023 FTSE 100 drops on higher-then-expected CPI The FTSE 100 has been declining since Friday’s five-week high and is being pushed lower as UK CPI comes in higher-than-expected ahead of Thursday’s Bank of England monetary policy meeting at which the central bank is expected to hike its rates for a thirteenth time, probably to 4.75%. The index is now pressing on the 200-day simple moving average (SMA) at 7,551 and the early June low at 7,546, a fall through which would open the way for the 1 June high at 7,510 to be reached ahead of the May trough at 7,433. Downside pressure should retain the upper hand while Monday’s low at 7,581 isn’t bettered. Further resistance can be seen along the breached May-to-June uptrend line at 7,630 which, because of inverse polarity, could act as resistance. Source: ProRealTime DAX 40 sees two consecutive days of lower prices The DAX 40 has come off Friday’s new all-time record high as investors re-assess the economic outlook and future central bank policy. A slip through Tuesday’s low at 16,067 would put the minor psychological 16,000 level back on the cards, together with the 55-day simple moving average (SMA) at 15,941. Minor resistance above last Thursday’s low at 16,160 sits at Monday’s low at 16,187 with further resistance seen along the breached May-to-June uptrend line at 16,252. Source: ProRealTime S&P 500 subdued ahead of Powell testimony The S&P 500 is seen coming off its 14-month high at 4,447 ahead of Jerome Powell’s US senate banking committee testimony on Wednesday and Thursday which is likely to re-iterate the Federal Reserve’s (Fed) hawkish stance. With the index having slid through its June uptrend line at 4,410, a short-term downside bias is in place. Failure at Tuesday’s low at 4,367 would put last Thursday’s low at 4,348 on the map. Minor resistance is to be found around the minor psychological 4,400 mark and at Tuesday’s high at 4,405. Source: ProRealTime

WTI stalls, gold slips on stronger greenback while wheat prices surge Outlook on WTI, gold and wheat ahead Jerome Powell’s US senate banking committee testimony. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 21 June 2023 WTI hugs April-to-June downtrend line WTI’s recovery from its current June low at $67.54 low has been struggling around the April-to-June downtrend line at $71.06 for the past four days as traders re-assess the global economy’s growth prospects and future oil demand. Federal Reserve (Fed) chair Jerome Powell’s speech to the US banking committee today and Thursday might give investors further clues as to future US monetary policy. For WTI to resume its ascent, Tuesday’s high at $72.36 will need to be overcome in which case the 10 May high and 55-day simple moving average (SMA) at $73.82 to $73.77 will be in focus. Further up sits key resistance at the $73.89 to $74.70 May and June peaks. Upside pressure should be maintained while Tuesday’s low at $69.78 underpins. Were it to give way, the mid-May low at $69.39 would be back in the picture. Source: ProRealTime Gold slips on stronger US dollar Gold is once again being pushed down by a recovering US dollar and approaches last week’s $1,925 per troy-ounce three-month low. If slipped through, the late January low at $1,901 would be targeted. Below it lie the 9 February high and 15 March low at $1,891 to $1,886. Downside pressure should be maintained while the price of the precious metal stays below its May-to-June downtrend line at $1,957. Only a currently unexpected bullish reversal and rise above last Friday’s high at $1,968 would void the now short-term bearish technical view. Source: ProRealTime Chicago Wheat spikes to major resistance Chicago Wheat’s rally to a two-month high occurred in line with corn and soybean futures surging on worries about Midwestern dryness. All three commodities saw a flurry of buying last week as traders positioned themselves ahead of the three-day Juneteenth weekend. Since then, the wheat price continues to rally but at a slower pace as it hits key resistance between $7.18 to $7.30. It consists of the December and January lows and March and April highs and is likely to thwart the recent up surge. If not, the 200-day single moving average (SMA) at $7.53 would be next in line. Potential slips may find support around the minor psychological $7.00 mark. Source: ProRealTime

Charting the Markets: 21 June Indices stay under pressure as UK inflation remains sticky. GBP/USD and EUR/GBP bolstered by UK inflation print while USD/JPY rises ahead of Powell testimony. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 21 June 2023 And WTI stalls, gold slips on stronger greenback while wheat prices surge. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.