Morning Wrap (06.01.2023)

• US markets turned lower on Thursday with the Dow losing 1.02%, S&P500 declining 1.16% and Nasdaq suffering another steep decline, this time of 1.47%
• This remains in start contrast with the European and the Chinese equity markets that remain buoyant this year – yesterday both the DE30 and CHNComp saw just a minor hesitation and today DE30 is already recovering, while CHNComp is modestly down
• The news flow remains supportive in Europe on the inflation front, after better data from Germany and France, yesterday we had lower inflation in Italy (11.6%) and lower PPI inflation in the EMU (27.1% vs 27.7% expected, data for November), mostly on lower energy prices
• Meanwhile in the US the data remains troublesome: while the activity is slowing down (PMI services down to 44.7 points and lower trade numbers), labour market remains strong with ADP at +235k (150 expected) and claims at 204k (230k expected)
• The message from the Fed remains far from soothing as well – James Bullard said yesterday that rates were still not as restrictive as necessary and any discussion on inflation target change would be  “very wrong”        
• Tesla slashed prices in China for the second time in 3 months in a move that may raise concerns about the demand for its vehicles – stock prices remain close to the lowest point since mid-2020
• AUD is the strongest while JPY is the weakest on the NFP day (1:30 GMT) as some smaller markets are closed due to the Epiphany

DE30 ignores Wall Street weakness and climbs towards the resistance zone that was rejected late in 2022