GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS:

Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS)

Wednesday was the worst day for European stocks since March 15, with Germany's DAX 40 declining more than 2% to a three-week low of 15,822 and the pan-European STOXX 600 falling 1.8% to its all-time low on April 5. The ongoing uncertainty surrounding U.S. debt-ceiling negotiations had a negative impact on investor sentiment, and higher-than-anticipated inflation data in the United Kingdom increased investors' expectations for future rate increases by the Bank of England. In May, German business sentiment deteriorated, primarily due to a precipitous decline in future expectations. Elsewhere, the luxury sector has come under pressure as a result of demand concerns, particularly in the crucial Chinese market. Later today, investors avidly anticipate the release of the minutes from the Federal Reserve's most recent policy meeting. The FTSE MIB fell 2.4% to close at 26,525, underperforming its European counterparts. Several companies are under intense selling pressure, particularly after yesterday's dividend payments of over 26 billion euros. Banco Siena (-7.1%) was the worst performer among individual equities, followed by Stmicroelectronics (-5.4%), Pirelli&C (-5%), and Leonardo (-5%). In contrast, Mediobanca outperformed, increasing nearly 1.9% after announcing financial goals for its strategic plan for 2023–2026. In particular, the management of Mediobanca anticipates an increase in shareholder compensation to €3.7 billion over the three-year period 2024–2026 and the introduction of an interim dividend. Meanwhile, investors remained focused on the impasse in U.S. debt ceiling negotiations and cautiously awaited the publication of the Federal Open Market Committee minutes later in the day.

Following its global counterparts, the Canada S&P/TSX Composite index declined for a second consecutive day, falling below 20,000 points for the first time since late March. Materials (-2,8%) and finances (-1,5%) accounted for the majority of the decline. As lenders braced for economic uncertainty, Bank of Montreal (-4%) and Bank of Nova Scotia (-2%) were among the worst performers after reporting lower domestic adjusted earnings. increased reserves. While negotiations are expected to continue, market sentiment remains subdued as the impasse over the US debt ceiling continues without resolution. In the meantime, traders adopted a more cautious stance prior to the publication of the minutes from the most recent Federal Open Market Committee (FOMC) meeting later in the day, which could shed light on the direction of U.S. interest rates.

As investors awaited developments in the debt ceiling impasse, U.S. stocks declined on Wednesday, with the Dow falling 300 points to a seven-week low of 32,821, while the S&P 500 and Nasdaq both fell nearly 1%. Today will mark the resumption of negotiations, with Republicans claiming the White House has lacked urgency in the discussions and Democrats claiming Speaker McCarthy is unwilling to make concessions. In the meantime, the FOMC minutes to be released later this afternoon should provide additional insight into the Fed's next move, while remarks from several officials have drastically reduced the likelihood of a rate cut this year. On the corporate front, Kohl's stock increased by approximately 15% after the retailer reported an unexpected profit and maintained its full-year profit forecast. Abercrombie & Fitch also exceeded earnings expectations, while Nvidia's earnings report is expected to be released after the market closes.

Hong Kong stocks fell 315.32 points, or 1.62 percent, to close at 19115.93 on Wednesday, declining for a second session and coming close to their lowest close in two months, as the Chinese government prohibited the purchase of Micron Technology Co Ltd. shares due to national security concerns. A product of the company (Micron Technology Inc.) amid escalating U.S.-China tensions. Meanwhile, foreign investors' capital outflows have persisted, and the yuan remains weak. Infections are expected to reach a zenith of approximately 65 million per week by the end of June, heightening concerns regarding the coronavirus outbreak. The decline in technology, consumer, and financial equities ranged from 1.6% to nearly 2%. Additionally, the real estate industry declined as some local government financing vehicles struggled to make timely debt repayments. Orient Express declined by 27.4%, Sands China by 5.5%, Lenovo Group by 8.2%, SenseTime Group by 4.6%, and Hansheng Pharmaceutical by 4.0%, respectively.

As investors digested the most recent CPI report and the U.S. debt-ceiling impasse, the FTSE 100 fell nearly 1.5% to 7,650, its highest level since early April. In April, the annual rate of inflation in the United Kingdom fell less than anticipated, and core interest rates unexpectedly rose to their highest level since 1992, reinforcing the Bank of England's need to continue raising rates. Meanwhile, investors remained cautious as no agreement on U.S. government debt had been reached. Taylor Wimpey (-4.2%) and Persimmon (-3.6%) performed the worst among home builders. On the corporate front, shares in Ocado Group fell nearly 2% after it was flagged as being removed from the FTSE 100 and added to the FTSE 250. Shares in M&S, on the other hand, rose nearly 7% after the company forecast a modest rise in annual revenue and said it would resume paying a dividend.

The Shanghai Composite Index fell 1% to around 3,215 and the Shenzhen Composite fell 0.75% to 10,930, with both benchmarks hitting their lowest levels in nearly five months amid a broad market sell-off. As investors cautiously awaited the most recent information on U.S. debt-ceiling talks, weaker global sentiment also weighed down mainland markets. Financial stocks led the decline, with Ping An Insurance (-1.7%), Agricultural Bank of China (-2.3%), Industrial and Commercial Bank of China (-2.8%), Bank of China (-2.7%), and CITIC Securities (-1.5%) falling sharply, including semiconductor manufacturing (-6.1%), 360 Security Technology (-1.6%), Inspur Electronics (-3.4%), HKUST Xunfei (-1.2%) and BOE Technology (-3.6%).

Nikkei 225 fell 0.8 percent to close below 30,800 and the Topix fell 0.3 percent to 2,155, falling for a second straight session as investors continued to take profits after a strong rally, with the benchmark The index reached its highest level since 1990. Japanese shares also followed Wall Street in losses overnight, as uncertainty over U.S. debt-ceiling talks continued to weigh on sentiment. Meanwhile, the Reuters Tankan sentiment index for Japanese manufacturers turned positive for the first time in May as the economy recovered from a coronavirus-induced slowdown. Index heavyweights fell significantly, such as Tokyo Electron (-0.8%), Advantest (-0.6%), Orient Land (-4.1%), Sony Group (-0.9%), Fast Retailing (-2.1%) and SoftBank Group (- 1.6%).

Australia's S&P/ASX 200 fell 0.3% to below 7,240 on Wednesday, marking its third straight session of losses as risk sentiment soured. Australian shares also followed Wall Street in losses overnight, as uncertainty over U.S. debt-ceiling talks continued to weigh on sentiment. Financials led the losses, with Macquarie Group (-0.8%), ANZ Group (-1%), NAB (-0.8%), energy and gold companies gaining on higher underlying commodity prices. Travel stocks also rose on a strong outlook for the sector 

New Zealand shares fell 55 points, or 0.46%, to 11,889 in early trade on Wednesday, a third straight day of losses following Wall Street's S&P 500 and Nasdaq losses of more than 1% on Tuesday, as U.S. government debt loomed breach of contract. Meanwhile, caution lingers ahead of the Reserve Bank of New Zealand's rate decision later today. The central bank is expected to raise the cash rate by 0.25 percentage points to 5.5%, its 12th consecutive hike and could tighten further amid loose fiscal policy to counter policymakers' efforts to cool demand. According to the latest data, retail sales in New Zealand fell by 1.4% on a quarterly basis in the first quarter of 2023, worse than the previous downward revision of 1%, reflecting the impact of ongoing cost pressures. Healthcare, consumer services and utilities dragged down the index, with losses in Bremworth Ltd. (-2.3%), Synlait Milk Ltd. (-1.9%), Tower Ltd. (-16%) and Marlborough Wine Estate (-1.1%) larger. In contrast, Eroad Ltd gained 17.2%.

India's S&P BSE Sensex fell 0.3% to 61,774 on Wednesday, while the blue-chip Nifty 50 fell by the same amount to close at 18,285, snapping a three-day winning streak. Financial and metals stocks led losses as global investors remained cautious over concerns over the U.S. debt ceiling impasse, while hawkish comments from two Federal Reserve officials further dampened sentiment. However, there were positive developments in the pharmaceuticals sector, with shares up more than 1% after Taro Pharmaceuticals' strong quarterly results, prompting global brokerage Macquarie to reiterate its "outperform" rating. Elsewhere, shares in Mahindra CIE Automotive Ltd jumped nearly 5%, with a 3.24% stake changing hands in a blockbuster deal after promoter Mahindra & Mahindra-Ltd sold its entire 3.195% stake.

 

REVIEWING THE LAST ECONOMIC DATA:

Reviewing the latest economic  news, the most critical data is:

- US: Data from the EIA Oil Status Report showed that in the week ending May 19, 2023, U.S. crude inventories fell by 12.456 million barrels, the largest drop since November 2022, while the market expected an injection of 75 million barrels. Elsewhere, gasoline inventories fell by 2.053 million barrels, beating expectations of 1.051 million barrels, and distillate stocks, which include diesel and heating oil, fell by 562,000 barrels, compared with a consensus for a rise of 385,000 barrels. On the other hand, crude inventories at the Cushing, Oklahoma, delivery hub rose by 1.762 million barrels, the most since late January.

- US: U.S. mortgage applications fell 4.6% for the week ended May 19, 2023, after falling 5.7% the week before, according to the Mortgage Bankers Association. Applications to refinance home loans fell 5.4%, while applications to purchase a home fell 4.3%. Meanwhile, the average contract rate on 30-year fixed-rate mortgages with qualifying loan balances ($726,200 or less) jumped 12 basis points to 6.69%, the highest level since early March. “We have yet to see a sustained increase in purchase requisitions due to wildly volatile interest rates and for-sale inventory remaining scarce,” said MBA vice president Joel Kan.

- UK: The CBI survey showed the total order balance for May 2023 edged up to -17 from -20 in the previous two months, beating forecasts for -19. Average selling price expectations fell to +21 from +23, suggesting manufacturers are expected to raise prices at the slowest pace since March 2021. On the other hand, the export order balance fell to -26 from -9.

- UK: Food inflation in the UK stood at 19.0% year-on-year in April 2023, little changed from the 45-year high of 19.1% in March, as prices for bread and cereals rose more slowly (19.3% versus 19.6% in March ); fish (17.2 percent versus 17.4 percent); milk, cheese and eggs (29.3 percent versus 29.7 percent); and sugar, jams and honey (16.7 percent versus 17.4 percent). Vegetable inflation, on the other hand, accelerated (19.9% vs. 19.3%).

- GE: In May 2023, Germany's Ifo business climate indicator fell 1.7 points from the previous month to 91.7, down from the previous month's 14-month high and below market expectations of 93.0. It also marked the index's first monthly decline since October, as industry expectations soured sharply and new orders likely fell sharply due to recent rate hikes and persistently high inflation.

- AU: In April 2023, Australia's Western Pacific Melbourne Institute Leading Economic Index was unchanged from the previous month and almost the same as in March. Meanwhile, the six-month annualized rate of growth for the index fell to -0.78% in April from -0.69% the previous month, indicating the likely pace of economic activity relative to trend over the next three to nine months. It was the ninth month of negative headlines, underscoring that a slowdown that started late last year could continue into late 2023 and early 2024. "Westpac expects growth of just 1 per cent in 2023 and continues its subdued performance in 2024 with only a modest increase to 1.5 per cent forecast," senior economist Matthew Hassan said. In both cases, activity contracted in terms of per capita prices. "

- JP: The Reuters Tankan sentiment index for Japanese manufacturers jumped to +6 in May 2023 from -3 in April, turning positive for the first time this year as the economy recovers from the coronavirus-induced slowdown. A monthly survey ahead of the Bank of Japan's quarterly Tankan report showed more companies said business conditions were good than bad. The report also found that sentiment among manufacturers was expected to rise further over the next three months, while morale in the services sector slipped only slightly. The auto and refining sectors were among the most optimistic as supply disruptions eased. Meanwhile, global headwinds and rising inflation levels continued to dampen consumption, hurting market sentiment.

 

LOOKING AHEAD:

Today, investors should watch out for the following important data:

- EUR: German Final GDP q/q, German GfK Consumer Climate, and German Buba President Nagel Speaks.

- GBP: CBI Realized Sales, and MPC Member Haskel Speaks.

- USD: Prelim GDP q/q, Unemployment Claims, Prelim GDP Price Index q/q, Pending Home Sales m/m, and Natural Gas Storage.

- CHF: Gov Board Member Maechler Speaks.

- CNY: CB Leading Index m/m.

 

KEY EQUITY & BOND MARKET DRIVERS:

Кey factors in the stock and bond market are currently:

- RU: The yield on Russia's 10-year OFZ rose to 10.7%, close to a one-year high of 11.2% reached on March 27, on the back of a hawkish CBR and ongoing concerns about the country's fiscal stability. While the CBR kept its key rate unchanged at 7.5% for the fifth time, it highlighted the possibility of future rate hikes to keep inflation below its 4% target over the medium term. Despite lower consumer inflation expectations, the central bank highlighted persistent inflation risks from a weaker ruble, deteriorating terms of trade, unsustainable budget deficits and a reduced workforce due to military mobilization. Russia's budget deficit for the first four months of 2023 was 3.4 trillion rubles, 17 percent higher than the government's overall deficit plan for 2023 of 2.9 trillion rubles.

- US: U.S. futures fell on Wednesday, with the Dow Jones down more than 100 points, the S&P 500 down 0.3 percent and the Nasdaq 100 down 0.2 percent, as investors awaited any progress on the debt ceiling impasse. Negotiations on the government's debt ceiling will continue this week, but no agreement has yet been reached. House Speaker Kevin McCarthy said on Tuesday that the two sides have yet to reach an agreement to avoid the first U.S. default. Meanwhile, the FOMC minutes due later in the afternoon will be closely watched for further clues on the Fed's next move, while comments from several officials sharply reduced bets on a rate cut this year. Note. On the corporate front, shares of retailer Kohl's jumped nearly 12% in premarket trading after it reported a surprise profit and maintained its full-year profit forecast. Abercrombie & Fitch also beat earnings estimates, while Nvidia's earnings report is scheduled to be released after the close.

- GE: German 10-year government bond yields continued to climb above the 2.4% level, the highest since April 24, on the back of strong U.K. inflation data, reminding investors that the global fight against rising prices is on. . UK inflation data showed that inflation fell less than expected to 8.7% in April, while the core index reached its highest level in more than 30 years at 6.8%. In addition, the European Central Bank is expected to continue its efforts to tighten monetary policy in response to concerns over inflation, despite concerns that a series of rapid rate hikes could have an impact on the financial system.

- UK: UK 10-year government bond yields have surpassed the 4.1% level, reaching their highest point since October 2022, as the latest CPI data raised expectations for further tightening by the Bank of England. The CPI report for April showed that the country's inflation rate fell to 8.7%, mainly driven by moderating energy prices. However, the rate is still significantly higher than the market forecast of 8.2% and the Bank of England's target rate of 2%. In addition, core inflation, which excludes food and energy, soared to its highest level in 31 years. Governor Andrew Bailey recently acknowledged that further tightening of monetary policy may be necessary if inflationary pressures persist. The Bank of England raised its key interest rate by 25 basis points to 4.5% in May, the highest borrowing costs since 2008.

- UK: UK consumer price inflation fell to 8.7% year-on-year in April 2023, the lowest since March 2022, as electricity and gas prices slowed sharply. Still, inflation beat market expectations of 8.2%, well above the Bank of England's 2.0% target. Housing and utilities inflation fell to 12.3 percent from 26.1 percent in March, while the cost of electricity, natural gas and other fuels rose to 24.3 percent from 85.6 percent in the previous month. Prices also rose more slowly in restaurants and hotels (10.2 percent versus 11.1 percent) and in furniture, household equipment and maintenance (7.5 percent versus 8.0 percent). Meanwhile, inflation for food and non-alcoholic beverages remained near March's record high (19.0% vs. 19.1%), while costs accelerated for transportation (1.5% vs. 0.8%), entertainment and culture (6.3% vs. 4.6%) and Miscellaneous goods and services (6.8% vs. 6.7%). The core rate, which excludes volatile items such as food and energy, jumped to a record high of 6.8%, well above forecasts of 6.2%.

 

LEADING MARKET SECTORS:

- Strong sectors: Energy.

- Weak sectors: Financials, Industrials, Materials, Health Care.

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

Кey factors in the currency and commodities market are currently:

- COP: Copper futures extended losses to $3.60 a pound, the weakest in six months, as supply outstripped demand and the demand outlook dimmed. A weak economic recovery, particularly in China, has hurt demand for the metal. Unlike previous slowdowns, the Chinese government has not implemented massive infrastructure or real estate spending that would have stripped copper and other metals of their safety net. Also, copper inventories on the London Metal Exchange have almost doubled since mid-April, pointing to weak demand globally. The increase in supply relative to demand is evident in the contango spread between LME copper spot prices and three-month futures, which is the widest since 1994. In addition, the International Copper Research Group said the global refined copper market was in surplus in March.

- GBP: Sterling bounced back above $1.24 after hitting a four-week low of $1.239 on May 23, as the latest inflation data still pointed to persistent inflationary pressures in the UK economy. The CPI report for April showed that the country's inflation rate fell to 8.7%, the lowest level since March 2022, mainly driven by moderating energy prices. However, the rate is still significantly higher than the market forecast of 8.2% and the Bank of England's target rate of 2%. Also, core inflation excluding food and energy surged to a 31-year high of 6.8%, with food inflation remaining near a 45-year high of 19.0%.

- NZD: New Zealand Dollar 50 Index rose 27.63 points, or 0.23%, to close at 11971.83, after lower early trade, boosted by non-energy minerals, healthcare, distribution services, and consumer durables. The index also rose for a third straight session, with traders digesting a move by the Reserve Bank of New Zealand, which raised borrowing costs by 25 basis points to 5.5%, the highest level since December 2008, but said its tightening policy was over, Cuts may begin in the third quarter of 2024. China, New Zealand's main trading partner, has pledged to reduce risks and stabilize economic growth by stepping up audits to make sure ruling party officials are implementing policy initiatives. Capping the gains were U.S. debt-ceiling talks, with Treasury Secretary Yellen continuing to warn lawmakers that there was a "high" chance of a default in early June. Accordant Group Ltd. rose 12 percent, joining Geneva Financial (6.7 percent), Green Cross Health Ltd. (5.3 percent), Gentrack Group (3.2 percent), and Savor Ltd. (4.2 percent).

- USD: The U.S. dollar index held steady around 103.5 on Wednesday, hovering near its highest level in two months, as investors waited patiently for the outcome of debt-ceiling talks in Washington. Another round of talks between President Joe Biden and House Speaker Kevin McCarthy showed little sign of progress late Tuesday, despite the looming risk of a default estimated in early June. Hawkish comments from Fed officials boosted expectations that interest rates would remain elevated for longer and also supported the dollar. In the latest comments, the Fed's Bullard raised the possibility of a half-percentage-point hike this year, while the Fed's Kashkari described a decision to pause or raise rates in June as a close call. Markets are now pricing in a pause in next month's rate hike cycle while reducing bets on a rate cut this year. Investors now look ahead to the minutes of the Federal Reserve's May meeting on Wednesday.

- CAD: The Canadian dollar held near 1.35 against the U.S. dollar as investors focused on the latest developments in Canadian and U.S. monetary policy. Concerns have grown that the Bank of Canada may be forced to resume rate hikes after data showed inflationary pressures remained elevated. Consumer prices rose an annualized 4.4% in April, well above expectations for a 4.1% increase, breaking a record 10-month streak of slowing inflation amid sharp increases in mortgage costs and rents. Also in the US, comments from several Fed officials raised expectations that interest rates would remain elevated for longer. The Fed's Bullard said a half-percentage-point increase in interest rates was possible this year, while the Fed's Kashkari said a decision to pause or raise rates in June was a close call.

 

CHART OF THE DAY:

The FTSE MIB fell 2.4% on Wednesday to conclude at 26,525, underperforming its European counterparts. Several companies are under intense selling pressure, particularly after yesterday's dividend payments of over 26 billion euros. Banco Siena (-7.1%) was the worst performer among individual equities, followed by Stmicroelectronics (-5.4%), Pirelli&C (-5%), and Leonardo (-5%). In contrast, Mediobanca outperformed, increasing nearly 1.9% after announcing financial goals for its strategic plan for 2023–2026. In particular, the management of Mediobanca anticipates an increase in shareholder compensation to €3.7 billion over the three-year period 2024–2026 and the introduction of an interim dividend. Meanwhile, investors remained focused on the impasse in U.S. debt ceiling negotiations and cautiously awaited the publication of the Federal Open Market Committee minutes later in the day.

 

 

 

 

 

Long-term Channels Trading Strategy for: (Italy FTSE MIB index).Time frame (D1). The primary resistance is around (28063). The primary support is around (25388). Therefore, the next most probable price movement is a (consolidation/down) trend. (*see all other details on the chart).

GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS: Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS) Wednesday was the worst day for European stocks since March 15, with Germany's DAX 40 declining more than 2% to a three-week low of 15,822 and the pan-European STOXX 600 falling 1.8% to its all-time low on April 5. The ongoing uncertainty surrounding U.S. debt-ceiling negotiations had a negative impact on investor sentiment, and higher-than-anticipated inflation data in the United Kingdom increased investors' expectations for future rate increases by the Bank of England. In May, German business sentiment deteriorated, primarily due to a precipitous decline in future expectations. Elsewhere, the luxury sector has come under pressure as a result of demand concerns, particularly in the crucial Chinese market. Later today, investors avidly anticipate the release of the minutes from the Federal Reserve's most recent policy meeting. The FTSE MIB fell 2.4% to close at 26,525, underperforming its European counterparts. Several companies are under intense selling pressure, particularly after yesterday's dividend payments of over 26 billion euros. Banco Siena (-7.1%) was the worst performer among individual equities, followed by Stmicroelectronics (-5.4%), Pirelli&C (-5%), and Leonardo (-5%). In contrast, Mediobanca outperformed, increasing nearly 1.9% after announcing financial goals for its strategic plan for 2023–2026. In particular, the management of Mediobanca anticipates an increase in shareholder compensation to €3.7 billion over the three-year period 2024–2026 and the introduction of an interim dividend. Meanwhile, investors remained focused on the impasse in U.S. debt ceiling negotiations and cautiously awaited the publication of the Federal Open Market Committee minutes later in the day. Following its global counterparts, the Canada S&P/TSX Composite index declined for a second consecutive day, falling below 20,000 points for the first time since late March. Materials (-2,8%) and finances (-1,5%) accounted for the majority of the decline. As lenders braced for economic uncertainty, Bank of Montreal (-4%) and Bank of Nova Scotia (-2%) were among the worst performers after reporting lower domestic adjusted earnings. increased reserves. While negotiations are expected to continue, market sentiment remains subdued as the impasse over the US debt ceiling continues without resolution. In the meantime, traders adopted a more cautious stance prior to the publication of the minutes from the most recent Federal Open Market Committee (FOMC) meeting later in the day, which could shed light on the direction of U.S. interest rates. As investors awaited developments in the debt ceiling impasse, U.S. stocks declined on Wednesday, with the Dow falling 300 points to a seven-week low of 32,821, while the S&P 500 and Nasdaq both fell nearly 1%. Today will mark the resumption of negotiations, with Republicans claiming the White House has lacked urgency in the discussions and Democrats claiming Speaker McCarthy is unwilling to make concessions. In the meantime, the FOMC minutes to be released later this afternoon should provide additional insight into the Fed's next move, while remarks from several officials have drastically reduced the likelihood of a rate cut this year. On the corporate front, Kohl's stock increased by approximately 15% after the retailer reported an unexpected profit and maintained its full-year profit forecast. Abercrombie & Fitch also exceeded earnings expectations, while Nvidia's earnings report is expected to be released after the market closes. Hong Kong stocks fell 315.32 points, or 1.62 percent, to close at 19115.93 on Wednesday, declining for a second session and coming close to their lowest close in two months, as the Chinese government prohibited the purchase of Micron Technology Co Ltd. shares due to national security concerns. A product of the company (Micron Technology Inc.) amid escalating U.S.-China tensions. Meanwhile, foreign investors' capital outflows have persisted, and the yuan remains weak. Infections are expected to reach a zenith of approximately 65 million per week by the end of June, heightening concerns regarding the coronavirus outbreak. The decline in technology, consumer, and financial equities ranged from 1.6% to nearly 2%. Additionally, the real estate industry declined as some local government financing vehicles struggled to make timely debt repayments. Orient Express declined by 27.4%, Sands China by 5.5%, Lenovo Group by 8.2%, SenseTime Group by 4.6%, and Hansheng Pharmaceutical by 4.0%, respectively. As investors digested the most recent CPI report and the U.S. debt-ceiling impasse, the FTSE 100 fell nearly 1.5% to 7,650, its highest level since early April. In April, the annual rate of inflation in the United Kingdom fell less than anticipated, and core interest rates unexpectedly rose to their highest level since 1992, reinforcing the Bank of England's need to continue raising rates. Meanwhile, investors remained cautious as no agreement on U.S. government debt had been reached. Taylor Wimpey (-4.2%) and Persimmon (-3.6%) performed the worst among home builders. On the corporate front, shares in Ocado Group fell nearly 2% after it was flagged as being removed from the FTSE 100 and added to the FTSE 250. Shares in M&S, on the other hand, rose nearly 7% after the company forecast a modest rise in annual revenue and said it would resume paying a dividend. The Shanghai Composite Index fell 1% to around 3,215 and the Shenzhen Composite fell 0.75% to 10,930, with both benchmarks hitting their lowest levels in nearly five months amid a broad market sell-off. As investors cautiously awaited the most recent information on U.S. debt-ceiling talks, weaker global sentiment also weighed down mainland markets. Financial stocks led the decline, with Ping An Insurance (-1.7%), Agricultural Bank of China (-2.3%), Industrial and Commercial Bank of China (-2.8%), Bank of China (-2.7%), and CITIC Securities (-1.5%) falling sharply, including semiconductor manufacturing (-6.1%), 360 Security Technology (-1.6%), Inspur Electronics (-3.4%), HKUST Xunfei (-1.2%) and BOE Technology (-3.6%). Nikkei 225 fell 0.8 percent to close below 30,800 and the Topix fell 0.3 percent to 2,155, falling for a second straight session as investors continued to take profits after a strong rally, with the benchmark The index reached its highest level since 1990. Japanese shares also followed Wall Street in losses overnight, as uncertainty over U.S. debt-ceiling talks continued to weigh on sentiment. Meanwhile, the Reuters Tankan sentiment index for Japanese manufacturers turned positive for the first time in May as the economy recovered from a coronavirus-induced slowdown. Index heavyweights fell significantly, such as Tokyo Electron (-0.8%), Advantest (-0.6%), Orient Land (-4.1%), Sony Group (-0.9%), Fast Retailing (-2.1%) and SoftBank Group (- 1.6%). Australia's S&P/ASX 200 fell 0.3% to below 7,240 on Wednesday, marking its third straight session of losses as risk sentiment soured. Australian shares also followed Wall Street in losses overnight, as uncertainty over U.S. debt-ceiling talks continued to weigh on sentiment. Financials led the losses, with Macquarie Group (-0.8%), ANZ Group (-1%), NAB (-0.8%), energy and gold companies gaining on higher underlying commodity prices. Travel stocks also rose on a strong outlook for the sector  New Zealand shares fell 55 points, or 0.46%, to 11,889 in early trade on Wednesday, a third straight day of losses following Wall Street's S&P 500 and Nasdaq losses of more than 1% on Tuesday, as U.S. government debt loomed breach of contract. Meanwhile, caution lingers ahead of the Reserve Bank of New Zealand's rate decision later today. The central bank is expected to raise the cash rate by 0.25 percentage points to 5.5%, its 12th consecutive hike and could tighten further amid loose fiscal policy to counter policymakers' efforts to cool demand. According to the latest data, retail sales in New Zealand fell by 1.4% on a quarterly basis in the first quarter of 2023, worse than the previous downward revision of 1%, reflecting the impact of ongoing cost pressures. Healthcare, consumer services and utilities dragged down the index, with losses in Bremworth Ltd. (-2.3%), Synlait Milk Ltd. (-1.9%), Tower Ltd. (-16%) and Marlborough Wine Estate (-1.1%) larger. In contrast, Eroad Ltd gained 17.2%. India's S&P BSE Sensex fell 0.3% to 61,774 on Wednesday, while the blue-chip Nifty 50 fell by the same amount to close at 18,285, snapping a three-day winning streak. Financial and metals stocks led losses as global investors remained cautious over concerns over the U.S. debt ceiling impasse, while hawkish comments from two Federal Reserve officials further dampened sentiment. However, there were positive developments in the pharmaceuticals sector, with shares up more than 1% after Taro Pharmaceuticals' strong quarterly results, prompting global brokerage Macquarie to reiterate its "outperform" rating. Elsewhere, shares in Mahindra CIE Automotive Ltd jumped nearly 5%, with a 3.24% stake changing hands in a blockbuster deal after promoter Mahindra & Mahindra-Ltd sold its entire 3.195% stake.   REVIEWING THE LAST ECONOMIC DATA: Reviewing the latest economic  news, the most critical data is: - US: Data from the EIA Oil Status Report showed that in the week ending May 19, 2023, U.S. crude inventories fell by 12.456 million barrels, the largest drop since November 2022, while the market expected an injection of 75 million barrels. Elsewhere, gasoline inventories fell by 2.053 million barrels, beating expectations of 1.051 million barrels, and distillate stocks, which include diesel and heating oil, fell by 562,000 barrels, compared with a consensus for a rise of 385,000 barrels. On the other hand, crude inventories at the Cushing, Oklahoma, delivery hub rose by 1.762 million barrels, the most since late January. - US: U.S. mortgage applications fell 4.6% for the week ended May 19, 2023, after falling 5.7% the week before, according to the Mortgage Bankers Association. Applications to refinance home loans fell 5.4%, while applications to purchase a home fell 4.3%. Meanwhile, the average contract rate on 30-year fixed-rate mortgages with qualifying loan balances ($726,200 or less) jumped 12 basis points to 6.69%, the highest level since early March. “We have yet to see a sustained increase in purchase requisitions due to wildly volatile interest rates and for-sale inventory remaining scarce,” said MBA vice president Joel Kan. - UK: The CBI survey showed the total order balance for May 2023 edged up to -17 from -20 in the previous two months, beating forecasts for -19. Average selling price expectations fell to +21 from +23, suggesting manufacturers are expected to raise prices at the slowest pace since March 2021. On the other hand, the export order balance fell to -26 from -9. - UK: Food inflation in the UK stood at 19.0% year-on-year in April 2023, little changed from the 45-year high of 19.1% in March, as prices for bread and cereals rose more slowly (19.3% versus 19.6% in March ); fish (17.2 percent versus 17.4 percent); milk, cheese and eggs (29.3 percent versus 29.7 percent); and sugar, jams and honey (16.7 percent versus 17.4 percent). Vegetable inflation, on the other hand, accelerated (19.9% vs. 19.3%). - GE: In May 2023, Germany's Ifo business climate indicator fell 1.7 points from the previous month to 91.7, down from the previous month's 14-month high and below market expectations of 93.0. It also marked the index's first monthly decline since October, as industry expectations soured sharply and new orders likely fell sharply due to recent rate hikes and persistently high inflation. - AU: In April 2023, Australia's Western Pacific Melbourne Institute Leading Economic Index was unchanged from the previous month and almost the same as in March. Meanwhile, the six-month annualized rate of growth for the index fell to -0.78% in April from -0.69% the previous month, indicating the likely pace of economic activity relative to trend over the next three to nine months. It was the ninth month of negative headlines, underscoring that a slowdown that started late last year could continue into late 2023 and early 2024. "Westpac expects growth of just 1 per cent in 2023 and continues its subdued performance in 2024 with only a modest increase to 1.5 per cent forecast," senior economist Matthew Hassan said. In both cases, activity contracted in terms of per capita prices. " - JP: The Reuters Tankan sentiment index for Japanese manufacturers jumped to +6 in May 2023 from -3 in April, turning positive for the first time this year as the economy recovers from the coronavirus-induced slowdown. A monthly survey ahead of the Bank of Japan's quarterly Tankan report showed more companies said business conditions were good than bad. The report also found that sentiment among manufacturers was expected to rise further over the next three months, while morale in the services sector slipped only slightly. The auto and refining sectors were among the most optimistic as supply disruptions eased. Meanwhile, global headwinds and rising inflation levels continued to dampen consumption, hurting market sentiment.   LOOKING AHEAD: Today, investors should watch out for the following important data: - EUR: German Final GDP q/q, German GfK Consumer Climate, and German Buba President Nagel Speaks. - GBP: CBI Realized Sales, and MPC Member Haskel Speaks. - USD: Prelim GDP q/q, Unemployment Claims, Prelim GDP Price Index q/q, Pending Home Sales m/m, and Natural Gas Storage. - CHF: Gov Board Member Maechler Speaks. - CNY: CB Leading Index m/m.   KEY EQUITY & BOND MARKET DRIVERS: Кey factors in the stock and bond market are currently: - RU: The yield on Russia's 10-year OFZ rose to 10.7%, close to a one-year high of 11.2% reached on March 27, on the back of a hawkish CBR and ongoing concerns about the country's fiscal stability. While the CBR kept its key rate unchanged at 7.5% for the fifth time, it highlighted the possibility of future rate hikes to keep inflation below its 4% target over the medium term. Despite lower consumer inflation expectations, the central bank highlighted persistent inflation risks from a weaker ruble, deteriorating terms of trade, unsustainable budget deficits and a reduced workforce due to military mobilization. Russia's budget deficit for the first four months of 2023 was 3.4 trillion rubles, 17 percent higher than the government's overall deficit plan for 2023 of 2.9 trillion rubles. - US: U.S. futures fell on Wednesday, with the Dow Jones down more than 100 points, the S&P 500 down 0.3 percent and the Nasdaq 100 down 0.2 percent, as investors awaited any progress on the debt ceiling impasse. Negotiations on the government's debt ceiling will continue this week, but no agreement has yet been reached. House Speaker Kevin McCarthy said on Tuesday that the two sides have yet to reach an agreement to avoid the first U.S. default. Meanwhile, the FOMC minutes due later in the afternoon will be closely watched for further clues on the Fed's next move, while comments from several officials sharply reduced bets on a rate cut this year. Note. On the corporate front, shares of retailer Kohl's jumped nearly 12% in premarket trading after it reported a surprise profit and maintained its full-year profit forecast. Abercrombie & Fitch also beat earnings estimates, while Nvidia's earnings report is scheduled to be released after the close. - GE: German 10-year government bond yields continued to climb above the 2.4% level, the highest since April 24, on the back of strong U.K. inflation data, reminding investors that the global fight against rising prices is on. . UK inflation data showed that inflation fell less than expected to 8.7% in April, while the core index reached its highest level in more than 30 years at 6.8%. In addition, the European Central Bank is expected to continue its efforts to tighten monetary policy in response to concerns over inflation, despite concerns that a series of rapid rate hikes could have an impact on the financial system. - UK: UK 10-year government bond yields have surpassed the 4.1% level, reaching their highest point since October 2022, as the latest CPI data raised expectations for further tightening by the Bank of England. The CPI report for April showed that the country's inflation rate fell to 8.7%, mainly driven by moderating energy prices. However, the rate is still significantly higher than the market forecast of 8.2% and the Bank of England's target rate of 2%. In addition, core inflation, which excludes food and energy, soared to its highest level in 31 years. Governor Andrew Bailey recently acknowledged that further tightening of monetary policy may be necessary if inflationary pressures persist. The Bank of England raised its key interest rate by 25 basis points to 4.5% in May, the highest borrowing costs since 2008. - UK: UK consumer price inflation fell to 8.7% year-on-year in April 2023, the lowest since March 2022, as electricity and gas prices slowed sharply. Still, inflation beat market expectations of 8.2%, well above the Bank of England's 2.0% target. Housing and utilities inflation fell to 12.3 percent from 26.1 percent in March, while the cost of electricity, natural gas and other fuels rose to 24.3 percent from 85.6 percent in the previous month. Prices also rose more slowly in restaurants and hotels (10.2 percent versus 11.1 percent) and in furniture, household equipment and maintenance (7.5 percent versus 8.0 percent). Meanwhile, inflation for food and non-alcoholic beverages remained near March's record high (19.0% vs. 19.1%), while costs accelerated for transportation (1.5% vs. 0.8%), entertainment and culture (6.3% vs. 4.6%) and Miscellaneous goods and services (6.8% vs. 6.7%). The core rate, which excludes volatile items such as food and energy, jumped to a record high of 6.8%, well above forecasts of 6.2%.   LEADING MARKET SECTORS: - Strong sectors: Energy. - Weak sectors: Financials, Industrials, Materials, Health Care.   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  Кey factors in the currency and commodities market are currently: - COP: Copper futures extended losses to $3.60 a pound, the weakest in six months, as supply outstripped demand and the demand outlook dimmed. A weak economic recovery, particularly in China, has hurt demand for the metal. Unlike previous slowdowns, the Chinese government has not implemented massive infrastructure or real estate spending that would have stripped copper and other metals of their safety net. Also, copper inventories on the London Metal Exchange have almost doubled since mid-April, pointing to weak demand globally. The increase in supply relative to demand is evident in the contango spread between LME copper spot prices and three-month futures, which is the widest since 1994. In addition, the International Copper Research Group said the global refined copper market was in surplus in March. - GBP: Sterling bounced back above $1.24 after hitting a four-week low of $1.239 on May 23, as the latest inflation data still pointed to persistent inflationary pressures in the UK economy. The CPI report for April showed that the country's inflation rate fell to 8.7%, the lowest level since March 2022, mainly driven by moderating energy prices. However, the rate is still significantly higher than the market forecast of 8.2% and the Bank of England's target rate of 2%. Also, core inflation excluding food and energy surged to a 31-year high of 6.8%, with food inflation remaining near a 45-year high of 19.0%. - NZD: New Zealand Dollar 50 Index rose 27.63 points, or 0.23%, to close at 11971.83, after lower early trade, boosted by non-energy minerals, healthcare, distribution services, and consumer durables. The index also rose for a third straight session, with traders digesting a move by the Reserve Bank of New Zealand, which raised borrowing costs by 25 basis points to 5.5%, the highest level since December 2008, but said its tightening policy was over, Cuts may begin in the third quarter of 2024. China, New Zealand's main trading partner, has pledged to reduce risks and stabilize economic growth by stepping up audits to make sure ruling party officials are implementing policy initiatives. Capping the gains were U.S. debt-ceiling talks, with Treasury Secretary Yellen continuing to warn lawmakers that there was a "high" chance of a default in early June. Accordant Group Ltd. rose 12 percent, joining Geneva Financial (6.7 percent), Green Cross Health Ltd. (5.3 percent), Gentrack Group (3.2 percent), and Savor Ltd. (4.2 percent). - USD: The U.S. dollar index held steady around 103.5 on Wednesday, hovering near its highest level in two months, as investors waited patiently for the outcome of debt-ceiling talks in Washington. Another round of talks between President Joe Biden and House Speaker Kevin McCarthy showed little sign of progress late Tuesday, despite the looming risk of a default estimated in early June. Hawkish comments from Fed officials boosted expectations that interest rates would remain elevated for longer and also supported the dollar. In the latest comments, the Fed's Bullard raised the possibility of a half-percentage-point hike this year, while the Fed's Kashkari described a decision to pause or raise rates in June as a close call. Markets are now pricing in a pause in next month's rate hike cycle while reducing bets on a rate cut this year. Investors now look ahead to the minutes of the Federal Reserve's May meeting on Wednesday. - CAD: The Canadian dollar held near 1.35 against the U.S. dollar as investors focused on the latest developments in Canadian and U.S. monetary policy. Concerns have grown that the Bank of Canada may be forced to resume rate hikes after data showed inflationary pressures remained elevated. Consumer prices rose an annualized 4.4% in April, well above expectations for a 4.1% increase, breaking a record 10-month streak of slowing inflation amid sharp increases in mortgage costs and rents. Also in the US, comments from several Fed officials raised expectations that interest rates would remain elevated for longer. The Fed's Bullard said a half-percentage-point increase in interest rates was possible this year, while the Fed's Kashkari said a decision to pause or raise rates in June was a close call.   CHART OF THE DAY: The FTSE MIB fell 2.4% on Wednesday to conclude at 26,525, underperforming its European counterparts. Several companies are under intense selling pressure, particularly after yesterday's dividend payments of over 26 billion euros. Banco Siena (-7.1%) was the worst performer among individual equities, followed by Stmicroelectronics (-5.4%), Pirelli&C (-5%), and Leonardo (-5%). In contrast, Mediobanca outperformed, increasing nearly 1.9% after announcing financial goals for its strategic plan for 2023–2026. In particular, the management of Mediobanca anticipates an increase in shareholder compensation to €3.7 billion over the three-year period 2024–2026 and the introduction of an interim dividend. Meanwhile, investors remained focused on the impasse in U.S. debt ceiling negotiations and cautiously awaited the publication of the Federal Open Market Committee minutes later in the day.           Long-term Channels Trading Strategy for: (Italy FTSE MIB index).Time frame (D1). The primary resistance is around (28063). The primary support is around (25388). Therefore, the next most probable price movement is a (consolidation/down) trend. (*see all other details on the chart).