Morning wrap (25.08.2023)

• In spite of a higher opening, US indices finished yesterday's trading over 1% lower. S&P 500 dropped 1.35%, Dow Jones moved 1.08% lower and Nasdaq slumped almost 1.9%. Small-cap Russell 2000 dropped almost 1.4%

• Declines on Wall Street were caused by weakness in consumer stocks, like Dollar Tree or Nike, as well as mid-session reversal in Nvidia shares, which dragged whole tech sector lower

• In spite of releasing superb fiscal-Q2 earnings report on Wednesday evening and launching yesterday trading with an almost 7% bullish price gap, Nvidia finished yesterday's cash trading with just 0.1% gain

• Indices from Asia-Pacific traded lower today, responding to a downbeat Wall Street session. Nikkei dropped 2%, S&P/ASX 200 traded 1% lower, Kospi was 0.9% down and Nifty 50 dropped 0.6%. Indices from China traded 0.1-1.1% lower

• DAX futures point to a lower opening of the European cash session today

• ECB Nagel said that he expects no recession but it is also much too early to think about rate-hike pause

• ECB Vujcic said that the euro area economy is stagnating and that inflation has most likely peaked. However, Vujcic was unsure whether rates are restrictive enough

• CPI inflation in the Japanese Tokyo area decelerated from 3.0% to 2.8% YoY in August (exp. 2.9% YoY)

• 73% of respondents in Reuters expect the Bank of Japan to end yield curve control some time next year. That's an increase from around 50% in July poll

• Citi expects OPEC to decide on more output cuts as oil production in Iran, Iraq, Libya, Nigeria and Venezuela is expected to grow while demand growth in China is expected to fade

• China Securities Regulatory Commission, Chinese securities regulator, confirmed that it met with pension funds, insurers and banks and encouraged them to increase equity investments

• Cryptocurrencies pull back - Bitcoin drops 0.2%, Ethereum trades 0.1% lower and Dogecoin drops 0.7%

• Energy commodities are trading slightly higher today

• Precious metals are pulling back - gold drops 0.2%, silver trades 0.3% lower and palladium declines 0.8%. Platinum is outperformer with 0.3% gain

• USD and CAD are the best performing major currencies while NZD and CHF lag the most

Dow Jones (US30) painted a bearish engulfing pattern yesterday, suggesting that the ongoing pullback may be about to deepen further. Source: xStation5