[Fujitomi] Attention on the witness questioning of Moritomo Gakuen's Kagoike by the Tokyo stock market

The U.S. stock market showed a mixed start. The S&P 500 index closed up 0.18% from the previous day at 2,348.45, and the Dow Jones Industrial Average finished at 20,661.30, down 6.71 points (0.03%). The Nasdaq Composite rose 0.48% to finish at 5,821.641. Market attention appears to be focused on the House vote on a revised bill to repeal and replace the Affordable Care Act (Obamacare). Some market participants have begun to point to a dimming Trump rally. Nike’s sharp drop also weighed on the Dow. A terrorist attack near the London Parliament building raised fears of security concerns. February existing home sales in the U.S. fell for the first time in two months, undershooting market expectations, and the January FHFA home price index remained unchanged from December, below market forecasts.

NYMEX WTI crude futures for May settled at 48.04 dollars per barrel, down 0.20 dollars (0.41%) from the previous day, as U.S. crude inventories surged again.

In the NY foreign exchange market, expectations that the U.S. economy would grow under the Trump administration faded. The prospect of dismantling Obamacare and uncertain support margins, along with news of a bombing in London, prompted defensive buying, pushing the dollar/yen to around 110.75 yen, its lowest in four months. The witness testimony of Mr. Kaneko of the Moritomo Gakuen school foundation is scheduled before both the House and Senate budget committees. If concerns about the Abe administration's outlook cause a large stock market drop, risk-off yen buying could increase accordingly.

Today, the Nikkei stock average focuses on the testimony of Kaneko of Moritomo Gakuen. Essentially, the mood is to wait ahead of the House vote on an Obamacare replacement bill in the United States, but signals indicating potential adverse effects on the Cabinet from remarks by Prime Minister Abe about donations could cause the market to falter.

Greens to list on the Tokyo Stock Exchange Second Section and the Nagoya Stock Exchange Second Section

[Positive factors]

・Expectations for President Trump’s policies

・Support from the Bank of Japan’s ETF purchases

・Nasdaq modest rebound; focus on Obamacare reform vote

・Nasdaq up (5821.64, +27.82)

・CME 225 futures up versus Osaka Exchange (18915, +5)

[Negative factors]

・Dow Jones falls (20661.30, -6.71)

・U.S. Nike Q3 earnings miss expectations, more than 7% drop — largest decline among S&P 500 components

・VIX at 12.80, up from the previous day

・U.S. February existing home sales fell 3.7% due to tight supply, worse than expected

・U.S. February existing home sales 5.48 million (forecast 5.57 million) (previous 5.69 million)

・U.S. MBA mortgage applications index -2.7% (previous +3.1%)

・NY Foreign Exchange Market: dollar weaker in the upper 110s, U.S. growth expectations fading; about 1 USD = 111.20-111.25 JPY

・European stock markets continued to fall, banks and Gems stuck in losses

・London stock market continued to fall, pressured by fading U.S. policy expectations and a stronger pound

・Oil futures at their lowest since November last year, U.S. stockpiles higher than expected (48.04, -0.20)

・Swiss government revises down 2017 growth forecast; 2018 outlook left unchanged

・Uncertainty surrounding the French presidential election

・Geopolitical risk from North Korea

・Greece’s debt crisis rekindled

・Political risk from the Moritomo Gakuen issue

【Other notable points】

・U.S. House to vote on Obamacare replacement bill

・U.S. Treasury auction conditions for 2-, 5-, and 7-year notes

・U.S. 10-year inflation-linked bond auction

・Philippine central bank policy rate announcement

・Taiwan central bank policy rate announcement

・Greens to list on the Tokyo and Nagoya Second Sections

・U.S. bond market – gains continue; movement to pass U.S. bill stagnates

・U.S. short-term rate futures show expectations of June rate hike fading

・NY gold futures – continued rise; buy sentiment supported by policy concerns

・U.S. Energy Information Administration (EIA) weekly petroleum status report as of 2017/3/17

Crude oil +4.954 million barrels (week to previous week -237 thousand)

Gasoline -28.11 million barrels (week to previous -3.055 million)

Distillates (including heating oil) -19.10 million barrels (week to previous -4.229 million)

Crude oil at Cushing, Oklahoma delivery point inventory

+1.419 million barrels (week to previous +2.130 million)

・Kaneko to testify; House and Senate budget committees

・Attack near the U.K. Parliament; 3 killed, over 20 injured — authorities call it a terrorist attack

・NZ Reserve Bank leaves rates unchanged; geopolitical tensions remain a concern

・UK credit rating and new EU trade agreement stance may influence Moody’s

・Portuguese prime minister calls for resignation of Eurogroup chair over "discriminatory remarks"

・U.S. housing loan applications decline; rates high — MBA

・Saudi Arabia credit rating lowered to A+, outlook stable — Fitch

《Schedule》

10:30　Debt Management Public-Private Roundtable

14:00　Computer shipments (February)

15:00　February machine tool orders final

14:00　February Singapore CPI

16:00　April Germany consumer confidence

16:45　March France business sentiment index

18:00　March ECB Monthly Bulletin

18:15　Brent BoE Deputy Governor's speech

18:30　February UK retail sales

21:30　Previous week's U.S. initial jobless claims

21:45　Yellen speaks

23:00　February U.S. new home sales

23:45　Laubenthaler ECB Executive Board member speech

24:00　April euro area consumer confidence

January 24 at 01:30 — Kashkari, President of the Federal Reserve Bank of Minneapolis, speaks

For market conditions, please refer to Twitter. https://twitter.com/fujitomi_8740