【Fujitomi】Tokyo Stock Market Slips Amidst Political Uncertainty in Japan and the United States

The U.S. stock market closed slightly lower the previous day. The S&P 500 index ended at 2,345.96, down 2.49 points (0.1%) from the previous day, and the Dow Jones Industrial Average finished at 20,656.58, down 4.72 points (0.02%). Reports suggested that the anticipated vote to approve reform to the healthcare system was delayed, which increased risk-off sentiment amid uncertainty about the outlook, leading to more selling. February U.S. new housing starts rose more than expected, reaching a seven-month high.

NYMEX WTI crude oil futures for May settled at $47.70 per barrel, down 34 cents (0.71%) from the previous day. Domestic U.S. supply overhang concerns favored selling.

Today’s Nikkei is expected to move in a seesaw pattern while monitoring the currency market. In the U.S., the alternative to Obamacare was expected to pass the House, but it was postponed. A delay could again bring awareness of policy delays on tax cuts and infrastructure spending, keeping the market environment wary. Domestically, concerns remain over the Morimoto Gakuen school institution issue. Political uncertainty between Japan and the United States is intensifying. Today is the “5th and 10th” when corporate settlements gather, so if domestic importers increase dollar purchases ahead of the mid-day settlement before 10:00 a.m., it could put downward pressure on the yen and positively affect export-related stocks.

[Positive factors]

- Expectation that the Bank of Japan will support demand with ETF purchases

- U.S. February new housing starts at 592,000 (forecast 565,000) (previous release 555,000)

- European stock markets rebounded; British retailers rose

- London stock market rebound, solid domestic demand boosting retailers

- Euro-area consumer confidence index improves to -5.0 in March, beating expectations

- Euro-area Q1 growth remains solid, according to surveys = ECB

- Reuters short survey: manufacturing up 5 points, post-Lehman’s best as currencies stabilize and orders rise

- Government to increase funding for surgical assistance robots

- March monthly report upwardly revises personal consumption

[Negative factors]

- Delays in Obamacare replacement bill vote

- U.S. stock market closes slightly lower as the healthcare bill vote is postponed

- Dow Jones falls (20,656.58, -4.72)

- NY crude futures continue to slide; attempts to rebound limited (47.70, -0.34)

- NY FX market unstable as Obamacare replacement prospects remain uncertain; USD/JPY around 111.00-111.05

- U.S. initial jobless claims 258,000 (forecast 240,000) (previous 241,000)

- CME 225 futures decline relative to Osaka Exchange (18,900, -30)

- VIX fear index at 13.10, up from the previous day

- Political risk from the Morimoto scandal

- Aide to Shouko Shouei involved in land deal, government officials showing favoritism, according to Iikoe

- Morimoto, involvement of Shouei’s staff

- Uncertainty surrounding the French presidential election

- Geopolitical risk on the Korean Peninsula

- Greece debt crisis resurging

[Other notable points]

- U.S. House of Representatives to vote on Obamacare replacement bill

- Europe and the U.K. switch to summer time on the 26th

- Oro to list on Tokyo Stock Exchange Mothers (IPO price: 2,070 yen)

- Sarepta Therapeutics to list on Tokyo Stock Exchange Mothers (IPO price: 185 yen)

- U.S. bond market flat; uncertainty over Obamacare replacement candidate dampens moves

- NY gold futures drop, profit-taking at levels not seen since 2/28

- Janet Yellen, Chair of the U.S. Federal Reserve, did not comment on policy or outlook

- Obamacare replacement bill remains in flux after House vote failed to materialize; Trump’s persuasion efforts unsuccessful

- IMF: G-20 statement aims to improve trade structure

- Fed funds rate hikes likely three or four times this year, says San Francisco Fed President Williams = WSJ

- U.S. Fed buys $4.1 billion in government agency MBS = NY Fed

- Hedge fund Eaton Park to close

《Schedule》

08:50 - Foreign and domestic securities trading status (weekly, reporting agency basis)

14:00 - January Composite Index Revised

06:45 - February New Zealand trade balance

08:00 - Kaplan, Dallas Fed President, speech

16:45 - Q4 2015 GDP confirmed value (France)

17:00 - March France manufacturing PMI flash

17:00 - March France service PMI flash

17:30 - March Germany manufacturing PMI flash

17:30 - March Germany services PMI flash

18:00 - March euro area manufacturing PMI flash

18:00 - March euro area services PMI flash

19:30 - Russian central bank policy rate announcement

21:00 - Evans, President of the Chicago Fed, speech

21:30 - February Canada CPI

21:30 - February U.S. durable goods orders

22:05 - Bullard, President of the St. Louis Fed, speech

23:00 - Dudley, President of the New York Fed, speech

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