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JAPAN PRODUCER PRICES RISE 1.2% ON YEAR IN JUNE



Producer prices in Japan were up 1.2 percent on year in June, the Bank of Japan said on Wednesday.

That missed expectations for an increase of 1.4 percent and was down from the upwardly revised 1.7 percent gain in May (originally 1.6 percent).

On a monthly basis, producer prices eased 0.2 percent following the flat reading in the previous month.

Excluding international transportation, producer prices rose 1.7 percent on year and fell 0.2 percent on month.

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EUROPEAN ECONOMIC NEWS PREVIEW: ECB MONETARY POLICY ANNOUNCEMENT DUE



The European Central Bank is slated to announce its monetary policy decision later today after the U.S. Federal Reserve hiked its benchmark rate by a quarter-point on Wednesday.

Markets widely expect the ECB to raise the main refi rate again by 25 basis points, to 4.25 percent. The outcome of the governing council meeting held in Frankfurt is due at 8.15 am ET.

ECB Chief Christine Lagarde is likely to repeat that the interest rates are set to remain high for an extended period.

Consumer sentiment from Germany and Italy are the other major economic reports due on Thursday.

At 2.00 am ET, the market research group Gfk is scheduled to issue Germany's consumer confidence survey data. The forward-looking sentiment index is seen at -24.7 in August, up from -25.4 in July.

At 3.00 am ET, Spain's statistical office INE releases retail sales and unemployment data. Sales are expected to grow 0.6 percent annually but much weaker than the 6.0 percent rise in May. The jobless rate is forecast to fall to 13.00 percent in the second quarter from 13.26 percent in the first quarter.

At 4.00 am ET, Italy's ISTAT publishes business and consumer confidence survey results. The consumer confidence index is seen falling to 107.8 in July from 108.6 in the previous month. The business sentiment index is expected to drop to 99.8 from 100.3 a month ago.

At 6.00 am ET, the Confederation of British Industry is set to publish Distributive Trades survey results.

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EUROPEAN ECONOMIC NEWS PREVIEW: GERMANY GDP, INFLATION DATA DUE



Quarterly national accounts and flash inflation data from Germany, France and Spain are due on Friday, headlining a hectic day for the European economic news. At 1.30 am ET, the French statistical office INSEE is slated to issue quarterly GDP and household consumption data. The economy is forecast to grow 0.1 percent in the second quarter after rising 0.2 percent a quarter ago.

At 2.00 am ET, retail sales and household consumption from Norway, and GDP, retail sales and unemployment figures from Sweden are due.

At 2.45 am ET, flash inflation data is due from France. Economists forecast consumer price inflation to ease to 4.3 percent in July from 4.5 percent in June.

At 3.00 am ET, flash GDP and inflation figures are due from Spain. The economy is expected to grow 0.4 percent in the second quarter after rising 0.6 percent in the first quarter. Consumer price inflation is seen at 1.6 percent in July compared to 1.9 percent in June.

At 4.00 am ET, Destatis is slated to release Germany's flash GDP data. Economists forecast the economy to grow 0.1 percent in the second quarter after a 0.3 percent drop in the preceding period.

In the meantime, producer prices from Italy and consumer prices from Poland are due. At 5.00 am ET, the European Commission publishes euro area economic sentiment survey results. The economic confidence index is expected to drop to 95.0 in July from 95.3 in June.

At 8.00 am ET, Destatis publishes Germany's flash inflation data for July. Economists expect consumer price inflation to slow to 6.2 percent from 6.4 percent in June.

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JAPAN RETAIL SALES SINK 0.4% IN JUNE



The value of retail sales in Japan was down 0.4 percent on month in June, the Ministry of Economy, Trade and Industry said on Monday - coming in at 13.225 trillion yen.

That missed expectations for an increase of 0.2 percent following the upwardly revised 1.4 percent gain in May (originally 1.3 percent).

On a yearly basis, retail sales climbed 5.9 percent, matching forecasts and up from 5.8 percent in the previous month.

Commercial sales were down 0.3 percent on month and up 0.2 percent on year at 49.001 trillion yen, while wholesale sales slipped 0.6 percent on month and 1.8 percent on year at 35.776 trillion yen.

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AUSTRALIAN DOLLAR AHEAD OF RBA RATE DECISION



At 11:30 pm ET in the early Asian session, the Reserve Bank of Australia will announce its monetary policy decision on interest rates. The RBA is expected to hike its benchmark lending rate by 25 basis points, from 4.10 percent to 4.35 percent.

Ahead of the RBA rate decision, the Australian dollar showed mixed trading against its major rivals. While the aussie fell against the euro, the U.S. dollar and the yen, it held steady against the NZ dollar.

As of 11:25 pm ET, the Australian dollar was trading at 1.6410 against the euro, 0.6695 against the U.S. dollar, 95.53 against the yen and 1.0810 against the NZ dollar.

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NZ DOLLAR DROPS AGAINST MAJORS



The New Zealand dollar weakened against other major currencies in the Asian session on Wednesday.

The NZ dollar fell to more than a 1-month low of 0.6101 against the U.S. dollar, from yesterday's closing value of 0.6148.

Against the euro and the yen, the kiwi dropped to a 9-day low of 1.7997 and a 2-day low of 87.42 from Tuesday's closing quotes of 1.7857 and 88.12, respectively.

The kiwi edged down to 1.0804 against the Australian dollar, from yesterday's closing value of 1.0750.

If the kiwi extends its downtrend, it is likely to find support around 0.59 against the greenback, 1.82 against the euro, 83.00 against the yen and 1.10 against the aussie.

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BANK OF ENGLAND SET TO HIKE INTEREST RATE



The Bank of England is set to lift its key interest rate on Thursday after its major counterparts U.S. Federal Reserve and the European Central Bank lifted benchmark rates last week.

The August decision is likely to be a close call between a 25 basis-point and a 50 basis-point hike. The announcement is due at 7.00 am ET. The bank will also release its quarterly monetary policy report along with the policy decision.

The Monetary Policy Committee is set to decide on a split vote with seven members seeking a rate increase, while two others calling for no change.

As the inflation has slowed to a 15-month low of 7.9 percent in June amid stretched housing affordability, the BoE is more likely to opt for a 25 basis point hike today.

The BoE has lifted its benchmark rate over the last thirteen consecutive policy sessions, taking it to the current 5.00 percent, which was the highest since 2008.

Last week, the U.S. Federal Reserve had raised the target range for the federal funds rate by 25 basis points to the highest since early 2001. The next day the ECB also resorted to a similar rate hike.

The International Monetary Fund recently projected growth in the UK to ease sharply from 4.1 percent in 2022 to 0.4 percent in 2023. However, the 0.4 percent growth reflects an upward revision as the lender sees a stronger-than-expected consumption and investment amid falling energy prices.

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Major US indicators show decline



US stock indices continued to drop in yesterday's trading. The Dow Jones Industrial Average dropped by 0.4%, NASDAQ lost 0.36%, and S&P 500 decreased by 0.49%.

American indicators began to fall on Wednesday after the sudden credit rating downgrade of the US from AAA to AA+ by Fitch. This was due to the potential deterioration of the country's budget situation over the next three years and the growing national debt, which requires a debt ceiling to be set.

However, this is not the only reason for the Wall Street index slump. Yesterday, macroeconomic data was released, which also contributed to the decline. One factor behind this negative trend was the increase in unemployment benefit claims by 6,000 in a week, reaching 227,000.

The business activity index in the service sector for the past month declined to 52.7% compared to the June figure of 53.9%, surpassing experts' predictions of a drop to 53%.

According to economists, as long as there are no signs of improvement in the labor market, there is a risk of further interest rate hikes. Unemployment remains one of the potential inflationary threats to the US Federal Reserve.

The next meeting of the central regulator will take place in September. All the statistical data received during this time will be considered by the Fed when making decisions on further monetary policy.

The corporate reporting season is in full swing. Among the largest American companies, Apple and Amazon are leading. Traders are eagerly awaiting the results of these companies.

Apple is the absolute leader in market capitalization, while Amazon dominates in online trading volume. Apple is expected to report on the continuation of declining revenue, which was observed in the past two quarters. In addition, investors are interested in information on the potential use of AI in the company's operations.

The stock value of Anheuser-Busch InBev rose by 1.7%, beating expert forecasts. DoorDash's shares also increased by 1.7% due to an improved forecast for annual core earnings and quarterly revenue report, driven by increased demand for their products.

In contrast, Qualcomm dropped by 10% due to a disappointing revenue forecast for the third quarter.

The US is experiencing a record decrease in oil inventories, which, combined with the country's credit rating downgrade, led to significant losses during the previous session. According to official data, oil inventories decreased by 17 million barrels in the last week of July, marking the largest decline in forty years.

However, since yesterday, the situation has started to stabilize, and oil prices are also normalizing. WTI crude oil futures increased by 1% to $80.31, and Brent crude oil futures rose by 0.9% to $83.92.

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US premarket on August 7: US stock market under pressure again

Futures on US stock indexes opened with a slight increase after another Friday sell-off, driven by a decreased appetite for risk following weak US labor market data. Treasury bond yields rose both on Friday and Monday during morning trading. S&P 500 futures gained 0.2%, while the yield on 10-year Treasury bonds increased by 8 basis points. NASDAQ futures rose by 0.3%. European stock indexes declined as Germany's industrial production fell to a six-month low in June, highlighting economic weakness.



Meanwhile, investors continue to analyze the perplexing signals from the Friday employment report in the US. According to the data, wages exceeded economists' forecasts, despite a slowdown in wage growth. Unemployment rate declined even further, but the number of new jobs was lower than economists' predictions.

Considering the July rally, which happens almost every year, August promises to be calm, and it is not surprising that investors are taking profits, leading to market weakness. Market sentiments for this week will depend on new data. It will start with Germany's consumer price index and continue with the US consumer price index on Thursday and UK GDP data on Friday. The US core consumer price index is predicted to rise by 0.2% in July, the slowest growth in 2.5 years.

German bonds fell after the Bundesbank's statement on Friday about halting interest payments on domestic government deposits. This unexpected move caught traders off guard, leading to a sell-off in 30-year debt, resulting in the highest yield since January 2014.

Meanwhile, representatives of the US Federal Reserve say that further rate hikes may be necessary. Over the weekend, Michelle Bowman stated, "We don't think central banks will get the rise in unemployment rate and sustained moderation in wage growth in the coming year that they hope to see."

In Asia, the yen fell for the first time in four days after the minutes showed that one of the Bank of Japan's members voted for the central bank to provide greater flexibility in managing the yield curve at the July meeting.

Regarding the S&P 500 index, demand for the trading instrument remains relatively low. Bulls may continue the uptrend, but they need to settle above $4,515. From this level, a surge to $4,539 may occur. An equally important task for bulls would be to control $4,557, which would strengthen the bullish market. In the event of a downward move due to decreased risk appetite, bulls will have to protect $4,488. A breakthrough would quickly push the trading instrument back to $4,469 and $4,447.

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Wall Street on the Rise: Awaiting Key Inflation Report

What's behind this rise? After a bit of anxious waiting, investors are getting back to business, preparing for the release of a key inflation report in the U.S. this week. This event has sparked significant interest, especially after last week ended with a decline in major indices and investors were eager to lock in their gains.

2023 is proving to be a real boom for U.S. stocks. The primary driver? Optimism surrounding artificial intelligence technology and faith in the steady growth of the global economy. The S&P 500 has soared an impressive 17.7% this year.

And while summer typically brings a certain lull in the market due to vacation season, August remains a month to watch. All eyes are now on Thursday: the U.S. consumer price report will provide much insight into the future course of the Federal Reserve. Recent employment news has made many cautious, suggesting that the Fed might keep rates high for much longer.

An interesting twist: John Williams of the New York Fed hinted at a potential rate cut in 2024, while Governor Michelle Bowman believes there needs to be another hike to achieve the desired 2% inflation.

The Dow Jones Industrial Average (.DJI) rose by 407.51 points (1.16%), reaching 35,473.13 points. This marks the largest single-day increase since June 15th of the current year. The S&P 500 (.SPX) showed a similar growth, increasing by 40.41 points (0.90%) to 4,518.44. The Nasdaq Composite (.IXIC) also advanced, climbing by 85.16 points (0.61%) to close the day at 13,994.40.

The tech-heavy Nasdaq managed to break a negative streak of four sessions. This has been the longest downward period for the year so far. It's worth noting that Tesla shares dropped 0.9% following the appointment of Vaibhav Taneja as the company's Chief Financial Officer, replacing Zach Kirkhorn.

Nasdaq had previously seen a decline for four consecutive days in May, and prior to that, the longest negative stretch was six sessions in October. The S&P 500 also recorded losses in four sessions in 2023, with similar streaks occurring in May and February. In December, the index lost ground in five consecutive sessions.

Overall, the main S&P indexes showed growth, particularly in communication services (.SPLRCL) by 1.9% and financial services (.SPSY) by 1.4%.

According to Refinitiv, second-quarter profits exceeded analysts' expectations for 79.1% of the 422 S&P 500 companies that have already reported. Berkshire Hathaway shares surged by 3.4%, reaching a record high after the company reported a quarterly profit of over $10 billion.

However, Tyson Foods shares dropped 3.8% due to third-quarter revenue failing to meet expectations. Vaccine manufacturers BioNTech SE and Moderna Inc also saw their shares decrease by 7.5% and 6.5% respectively.

BioNTech SE slashed its drug development budget due to a decrease in quarterly revenue, stemming from reduced demand brought on by the pandemic. Additionally, the investment bank Leerink revised downward its target price for Moderna Inc's shares.

Sage Therapeutics' (SAGE.O) stocks saw a sharp decline of 53.6%, marking the largest drop since December 2019. This happened after the U.S. drug regulator rejected their application for a postpartum depression treatment. Meanwhile, shares of their partner, Biogen (BIIB.O), rose by 0.9%.

Trading volume on U.S. exchanges amounted to 9.92 billion shares, which is below the 20-day average of 10.86 billion. Within the S&P 500 index, 19 new 52-week highs and eight lows were registered. As for the Nasdaq Composite, the number of new highs reached 71, with lows at 169.

The CBOE Volatility Index, based on option trading for the S&P 500, decreased by 7.78%, settling at 15.77.

On the commodities market, the December delivery gold futures fell by 0.26% to $1.00 per troy ounce. WTI and Brent oil futures also showed a slight decline, reaching $82.52 and $85.86 per barrel respectively.

On the foreign exchange market, the EUR/USD pair showed a minor change, settling at 1.10 (a 0.09% change), while the USD/JPY increased by 0.53% to 142.50. The U.S. dollar futures rose by 0.07%, settling at 101.90.

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