【Fujitomi】CME 225 futures fall below 19,000 yen; risk-off mood

https://www.fujitomi.co.jp/?p=13878

U.S. stocks fell sharply. The S&P 500 Index ended down 1.2% at 2344.02, and the Dow Jones Industrial Average finished at 20,668.01, down 237.85 (1.1%). Concerns over delays in implementing large tax cuts by the Trump administration heightened risk-off mood. Uncertainty over the administration’s healthcare reform plan and the pace of future rate hikes weighed on sentiment, with the financial sector, led by banks, falling sharply on expectations of lower rates.

NYMEX WTI crude oil futures for the April contract settled at 47.34 dollars per barrel, down 88 cents (1.82%) from the previous day, with the front-month May contract ending at 48.24 dollars, down 67 cents. Domestic U.S. output growth concerns and other factors pushed prices lower.

In the NYC foreign exchange market, risk-off mood driven by falling U.S. rates and stock declines spurred dollar buying, sending USD/JPY below 112. Toward the close, further stock market declines discouraged risk appetite, and the dollar-yen fell to 111.55.

The settlement value of CME Group’s Japanese stock index futures (yen-denominated) fell 340 yen from the previous day’s intra-day level to 18,970 yen, dipping below the 19,000 yen milestone. Today’s Nikkei Average is expected to extend its losses on U.S. stock declines and a stronger yen. There is some expectation for Bank of Japan ETF purchases, but the risk-off mood today may dampen that. Tomorrow’s testimony on the Moritomo scandal is also a point of interest.

In IPOs, MacroMill (3978) will re-list on the Tokyo Stock Exchange First Section, and Fultech (6546) will list on the TSE Second Section.

[Benefits]

• Policy expectations for President Trump

• BOJ ETF purchases providing demand-side support

• Public land prices, housing land rising for the first time in nine years

[Sell factors]

• U.S. stock market falls sharply on concerns about delays in tax cuts

• Dow Jones declines (20668.01, -237.85)

• Dollar/Yen at four-month low; uncertainty over Trump administration policies 1 USD = 111.45-111.50 JPY

• U.S. crude oil futures at the lowest since November last year, concerns of oversupply rekindled (47.34, -0.88)

• CME240 futures down versus Osaka Exchange (19,970, -340)

• European stock markets — continuing declines, uncertainty over prospects of U.S. administration reforms

• London stock market — retreat, pound strength weighing on sentiment

• Swiss government revises down 2017 growth forecast; 2018 forecast held steady as recovery remains firm

• Uncertainty around the French presidential election

• North Korean geopolitical risk

• Greece debt crisis rekindled

• Fear Index VIX rose to 12.47 from the previous close

【Other notable points】

• 40-year government bond auction

• Fultech new listing on TSE Second Section (IPO price: 600 yen)

• MacroMill re-listing on TSE First Section (IPO price: 1,950 yen)

• U.S. bond market — continued gains; uncertainty about U.S. policy and stock weakness also supportive for bonds

• New York gold futures — continued rise; dollar weakness and risk aversion pushing to two-day highs

• Tomorrow on the 23rd, Moritomo Gakuen director to be questioned as a witness

• U.S. current account deficit for Oct-Dec: -112.4 billion dollars (expected -128.2 billion; previous -113.0 billion)

• No worry about changing the balance-sheet policy this year, says U.S. Cleveland Fed President

• Japanese and Italian leaders against protectionism in G7

• Park Geun-hye completely denies accusations

• Apple unveils new iPad, price starting at a record-low 329 dollars

《Schedule》

08:50 Japanese Bankers Association Policy Board and Monetary Policy Meeting minutes (Jan 30-31)

08:50 Trade balance (Feb) 8,072 billion yen, -1,876 billion yen

10:00 Copper and copper alloy products production statistics (Feb, FY2017 outlook)

10:00 Semi-annual business report (as of Mar 20)

13:30 All-industries activity index (Jan)

14:00 Domestic shipments of consumer electronics (TVs, DVD shipments) (Feb)

14:00 National supermarket sales (Feb)

15:00 Department store sales (nationwide, Tokyo area) (Feb)

17:00 Bank of Japan holdings by issue balance of government bonds

17:00 BOJ purchases of government securities by issue

07:00 Mr. Mester, President of the Cleveland Fed, speaks

10:45 Ms. Rosengren, President of the Boston Fed, speaks

17:00 February South Africa CPI

17:00 Current account balance for Oct-Dec in South Africa

17:30 Mr. Caron, Governor of Banque de France, speaks

18:00 January euro area current account balance (seasonally adjusted)

20:00 MBA mortgage applications index

20:30 Mr. Lautenschläger, Executive Board member of the ECB, speaks

22:00 January U.S. housing price index

23:00 February U.S. existing home sales

23:30 EIA weekly petroleum status report

February 23, 05:00 New Zealand Reserve Bank policy rate announcement

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