【Fujitomi】Tokyo stock market falls again? Yen appreciation weighs on it

Last weekend the U.S. stock market closed slightly lower. The S&P 500 index finished at 2,343.98, down 0.08% from the previous day, and the Dow Jones Industrial Average ended at 20,596.72, down 59.86 points (0.28%). The Republican-led U.S. House of Representatives failed to secure enough votes to pass the healthcare bill, but the market was restrained by expectations for tax reform.

In the market, a mood to assess policy uncertainty and the political risk from “Moritomo Gakuen” has been rising. President Trump indicated he would withdraw the replacement for Obamacare, and push for a large tax cut lowering corporate and personal income taxes, but with just over two months into his administration, there are signs of governance stumble, and uncertainty is being felt in parts of the market. Today, the Nikkei Average is expected to struggle as the yen strengthens. On the other hand, with tomorrow the final ex-dividend and rights trading day for March, buying aimed at capturing dividends and shareholder benefits may support the market.

[Buying factors]

- Expectations that the Bank of Japan’s ETF purchases will support supply and demand

- U.S. stock market—Nasdaq rebounds

- NY crude oil futures—rebound; remain in a oversupplied state despite a pullback (47.97, +0.27)

- U.S. durable goods orders for February +1.7% (consensus +1.2%) (previous month +2.0%)

- The VIX fear index at 12.96, down from the previous day

[Selling factors]

- Trump administration policy operations remain opaque

- U.S. stock market—slight decline following the withdrawal of Obamacare replacement bill

- Dow Jones: down (20,596.72, -59.86)

- European stock markets: slightly lower, uncertainty over Obamacare replacement bill

- London stock market: down, concerns over Obamacare replacement bill

- CME 225 futures down versus Osaka Exchange (19,095, -45)

- Political risk over the Morita-Morimoto (Morimoto Gakuen) issue

- Uncertainty ahead of the French presidential election

- North Korea geopolitical risk

- Greece, debt crisis resurges

[Other points of interest]

- U.S. 2-year Treasury note auction

- U.S. bond market—treasury prices rise, due to Obamacare replacement bill withdrawal

- Baker Hughes: U.S. oil rig count shows a substantial increase since January

- NY gold futures—rebound, swung by dollar movements around U.S. policy

- Obamacare replacement bill withdrawn; Trump says “next is tax reform”

- President Trump approves construction of the Keystone XL pipeline

- Second rate hike this year still “OK”; no need for aggressive tightening—chair of the Federal Reserve Bank of St. Louis

- Monetary policy is not a cure-all; countries should fully utilize policy tools—People’s Bank of China governor

- EU leaders’ summit adopts the “Rome Declaration” to strengthen unity

- ECB policy: next moves are fluid — German state bank president

- Bank of Russia lowers key rate from 10.00% to 9.75%

- TEPCO restructures its leadership

- Toshiba to file for U.S. nuclear power plant bankruptcy protection

《Schedule》

08:50 BOJ Monetary Policy Meetings and the main opinions (March 15–16)

08:50 February Corporate Services Price Index

10:30 Corporate profits of the Nonmetals & Industrial sector (February)

17:00 Euro area M3 money supply for February

17:00 March German Ifo business climate index

21:00 Plos European Central Bank (ECB) Executive Board member to speak

28th 02:00 U.S. Treasury, 2-year note auction ($26 billion)

28th 02:15 Evans, President of the Federal Reserve Bank of Chicago, to speak

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