Nikkei stock average extends gains; range-bound after SQ https://www.fujitomi.co.jp/?p=13630 With caution ahead of the U.S. employment report, the U.S. stock market edged higher. The S&P 500 index closed up 0.07% at 2364.87, and the Dow Jones Industrial Average rose 2.46 points (+0.01%) to 20858.19. The yield on the 10-year U.S. Treasury note rose briefly to about 2.60%, its highest in nearly three months. In spite of this, buying in financial shares supported the market. Meanwhile, U.S. crude oil futures hit a roughly three-month low, triggering selling in the oil sector and weighing on the market’s upside. NYMEX WTI futures for April finished at 49.28 dollars per barrel, down 1.00 dollar (1.99%). Domestic inventory concerns and vigilance over shale oil expansion plans bred bearish sentiment. In the U.S. FX market, the rise in U.S. interest rates led to a stronger dollar and weaker yen. By the close, the yen briefly touched around 115.00 per dollar, the lowest in about one and a half months since January 30. With expectations that the FOMC will hike rates next week on the 14th-15th, traders speculate that the pace of future rate hikes could be faster than previously anticipated. The ECB kept policy unchanged at its latest meeting. Draghi’s press conference was not as dovish as markets had expected, supporting euro-buying against major currencies. Stock index futures and options for the March contract, as the special quotation (SQ) date approaches, are expected to extend gains on the yen’s weakness. With the calendar shift for futures, from today the Nikkei 225 futures will trade below the Nikkei Stock Average by about 130 yen due to the March ex-dividend. After the SQ, with attention to the currency market, markets may become range-bound, but the dollar/yen at around 115 could allow further upside. In the U.S., the February employment data will be released. Next week, the FOMC meeting is scheduled. 【Buying factors】 ・Expectations of benefits from the Trump administration’s “growth-oriented policy” ・Expectations for Trump’s policies ・U.S. stock market modestly higher; energy shares rebound ・Dow Jones up (20858.19, +2.46) ・Nasdaq up (5838.81, +1.26) ・CME 225 futures higher than Osaka Exchange, close at 19290 (June contract) ・Fed Chair hints at March rate hike ・Forex: dollar-yen around 115.00-05 【Selling factors】 ・Oil futures further decline; U.S. WTI below 50 dollars for first time since December (49.28, -1.00) ・European stock markets slide with oil weakness ・Fear gauge VIX at 12.30, up from the previous day ・Concerns about Europe’s political situation ・Uncertainty ahead of the French presidential election ・Uncertainty over EU national elections ・North Korea geopolitical risk ・Greece debt crisis resurging 【Other points to watch】 ・Major SQ calculation date ・EU leaders’ summit (Brussels, final day) ・Dollar weakens against euro, ECB President remarks; NY market ・U.S. bonds continue to fall; yields rise on expectations of more rate hikes; focus on employment data ・COMEX gold futures fall on expectations of U.S. rate hikes and a stronger dollar ・ECB keeps policy rate at 0.00% ・ECB keeps deposit facility rate at -0.40% ・New U.S. immigration order faced another injunction in Washington state ・U.S. to hold a meeting of 68 countries on the 22-23 to accelerate IS elimination ・U.S. Treasury Secretary requests early debt ceiling increase from Congress ・U.S. Fed buys $7.8 billion in government-sponsored MBS — NY Fed ・IMF Deputy Director warns that if France exits the euro, it would face severe poverty — local paper 《Schedule》 08:50 1Q and 3Q corporate sentiment survey 09:30 January Australian housing loans 16:00 February German PPI (WPI) 16:00 January German trade balance 16:00 January German current account 16:45 January French industrial production index 18:30 January UK industrial production index Manufacturing output 18:30 January UK trade balance 22:30 February U.S. employment data 22:30 February Canadian employment data 04:00 11th February U.S. monthly treasury balance We would appreciate if you could refer to Twitter for market updates. https://twitter.com/fujitomi_8740