[Fujitomi] The Tokyo Stock Market Faces a Step-by-Step Drift as It Watches the Exchange Rate

The U.S. stock market was mixed. The S&P 500 index finished up 0.1% from the previous day at 2,361.13, and the Dow Jones industrial average ended down 42.18 points (0.2%) at 20,659.32. The Nasdaq rose for the fourth consecutive day, closing up 0.38% at 5,897.547. Financials fell, but energy and consumer-related stocks remained solid and supported the market. Attention centered on comments by Federal Reserve presidents Williams of the San Francisco district and Rosengren of the Boston Fed that four rate hikes for the year would be the base case to prevent an overheating economy; however, since both presidents do not have voting rights this year, their impact on equities was limited. January 2017 pending home sales in the United States rose more than market expectations, marking the largest gain since 2010.

NYMEX WTI futures for May settled up $1.14 (2.36%) at $49.51 per barrel. This was the highest close since March 8. The gains were buoyed by expectations that last week’s crude oil inventories were below expectations and gasoline inventories fell far more than anticipated.

Today’s Nikkei Stock Average may fluctuate within a narrow range. The dollar/yen near 111 yen with a slow rebound could lead to selling pressure on major export-related stocks. The previous day’s Nikkei average appeared robust, factoring in dividend rights. The new fiscal year has started on a delivery basis. Domestic institutional investors tend to lock in profits at the start of the new fiscal year, but overseas players remain keenly interested.

https://www.fujitomi.co.jp/?p=14085

【Positive factors】

・U.S. stock market = S&P 500 up, buying in energy and consumer-related stocks

・Vertex Pharmaceuticals up 20.45% on favorable late-stage trial results

・U.S. February existing home sales pending index +5.5% (vs. expected +2.4%) (previously reported: -2.8%)

・U.S. dollar in the New York market rising against major currencies on expectations of interest rate differentials with Europe and the U.S.

・VIX fear index at 11.42, down from the previous day

・European stock markets continued to rise, limited reaction to the UK EU withdrawal notice

・London stock market continued higher; pound fell on Brexit notice

・OPEC output projected to decline for a third consecutive quarter; UAE supply cuts contributing

・CME 225 futures closed up 19,165 against Osaka exchange

・BOJ ETF purchases expected to underpin supply/demand

【Negative factors】

・Trump administration lacks policy-operational clarity

・U.S. stock market mixed; Dow declines

・Toshiba posts worst-ever 1 trillion yen loss

・Political risk from the Moritomo Gakuen affair

・Uncertainty about the French presidential election

・Geopolitical risk on the Korean peninsula

・Greece debt crisis reignites

【Other notable points】

・New York gold futures pull back but remain attractive as a safe haven

・NY currency market – USD/JPY fluctuates around 111.00

・U.S. Treasury market – rebound; no reaction to hawkish statements today

・Southeast Asian stocks – Jakarta hits a fresh high, Singapore at an 8-month high

・UK formally notifies EU of Brexit; May says “no turning back”

・“America First” is not a growth- and employment-boosting strategy, says German economics minister

・U.S. economy nearly fully recovered; three or more rate hikes possible this year, says San Francisco Fed president

・Federal Reserve should raise rates three more times this year, according to Boston Fed president

・U.S. rate hikes of two more times this year considered “very safe,” says Chicago Fed president

・U.S. Energy Information Administration (EIA) weekly petroleum status: as of 2017/03/24

Crude oil +0.87 million barrels (Previous week +4.954 million barrels)

Gasoline -3.747 million barrels (previous week -2.811 million)

Distillates (including heating oil) -2.483 million barrels (previous week -1.910 million)

Crude oil in Cushing, Oklahoma – oil inventory

-2.20 million barrels (previous week +1.419 million)

《Schedule》

08:50 External Securities Transactions (week in review)

15:00 February South Africa Money Supply M3

16:00 March Switzerland KOF leading indicator

17:00 Reijo Kananen, Governor of the Bank of Finland, speaks

18:00 March Eurozone Consumer Confidence

18:15 Novak Toni, Governor of the Austrian National Bank, speaks

18:30 February South Africa Wholesale Price Index

21:00 March Germany Consumer Price Index (CPI) flash

21:30 February Canada Industrial Product Price

21:30 February Canada Raw Materials Price Index

21:30 10-12 quarter U.S. GDP (advance estimate)

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

22:45 Mester, President of the Federal Reserve Bank of Cleveland, speaks

TBD South Africa Reserve Bank policy rate announcement

24:00 Kaplan, President of the Dallas Fed, speaks

31st 00:15 Williams, President of the San Francisco Fed, speaks

31st 04:00 Mexican central bank policy rate announcement

31st 05:30 Dudley, President of the Federal Reserve Bank of New York, speaks

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