【Fujitomi】Tokyo stock market rebounds? Yen appreciation pauses pleasing investors

The U.S. stock market edged higher. The S&P 500 index rose 0.1% from the previous close to 2360.16, and the Dow Jones Industrial Average gained 39.03 points (0.2%) to 20689.24. The trade deficit narrowed as market expectations, marking the lowest deficit in four months. February U.S. factory orders also increased, as expected. By sector, energy held firm on the back of rising crude prices. Overall, ahead of the FOMC minutes released today, the U.S.-China summit commencing tomorrow, and Friday’s March payrolls report, the market traded in a narrow range around the prior close with no clear direction.

NYMEX WTI crude oil futures for the May contract closed at 51.03 dollars per barrel, up 79 cents (1.57%) from the previous session. The close was the highest since March 7. The rebound was aided by expectations of a draw in U.S. crude stocks. The unexpected halt of operations at the North Sea’s Buzzard field also supported the rally.

The previous day’sOSE225 futures for June rose 110 yen to 18,930 yen, compared with the previous day’s intraday close. The yen, which briefly traded below 110 per dollar, saw yen-buying pressure ease in New York. Today, the Nikkei is likely to unfold with a to-the-moon rebound. North Korea fired a ballistic missile toward the Sea of Japan early this morning. With yesterday’s speculation surrounding the U.S.-China summit, geopolitical risk could reemerge, so caution is needed. As the U.S.-China summit and U.S. payrolls data loom, after a strong opening the market is likely to tread water.

https://www.fujitomi.co.jp/?p=14231

【Positive factors】

・U.S. stock market – Dow up for a third day in a row with modest gains; energy stocks strong

・Dow Jones higher (20689.24, +39.03)

・Nasdaq higher (5898.61, +3.93)

・U.S. electric vehicle maker Tesla surges 5.8% to a fresh intraday high; market capitalization surpasses Ford

・European stock markets – modest gains; UK's FTSE 100 rebounds for the first time in four days

・NY oil futures – rebound to the highest since 3/8 (51.03, +0.79)

・NYC forex – dollar/yen in the late-100s range; risk-off yen buying subsiding

・VIX fear index at 11.79, down from the previous day

・Supportive demand expectation from Bank of Japan ETF purchases

・Expectations for capital inflows with the new fiscal year

・CME 225 futures rise relative to Osaka Exchange (18,900, +80)

【Negative factors】

・Trump administration adds uncertainty to policy implementation

・North Korea launches projectile; South Korea reports

・Geopolitical risk from North Korea

・Greece debt crisis risks resurfacing

・Uncertainty about the French presidential election

・Yen rises; anticipation of U.S.-China summit causes risk-off buying in New York

・Possible airstrikes in Syria using chemical weapons

・Toshiba may delay earnings announcements again

【Other notable points】

・U.S. stock market: almost flat; wait-and-see mood ahead of corporate results

・U.S. Treasuries: declines; position adjustments ahead of FOMC minutes

・U.S. Treasuries: 10-year yield briefly falls as doubts surface about the Trump administration’s policy execution

・NY gold futures: extended gains on geopolitical tensions, but the rise is pausing

・U.S. February trade deficit -436 billion dollars [expected -44.8 billion?] (previously -48.5 billion)

・Trump administration considering VAT or carbon tax in tax reform, reports say

・Infrastructure plan may exceed $1 trillion, according to President Trump

・Consideration of revising financial regulations act, says President Trump

・Volcker Rule is too complex; parts may be unimplementable, says Tarullo, Fed Governor

・Move to revive Obamacare repeal is at a conceptual stage, says Speaker Ryan

・U.S. Richmond Fed president resigns amid possible policy information leak

・Possible Greece bailout agreement within coming weeks, says European Commission official Moscovici

《Schedule》

14:00: Koichi Hitotsu Hamada, Cabinet Office official, to speak on Ueda Haro’s web live

16:50: March U.S. service sector PMI (final)

16:55: March German services PMI (final)

17:00: March euro-area services PMI (final)

17:30: March U.K. services PMI

TBD: Polish central bank policy rate announcement

20:00: MBA mortgage applications index

21:15: March ADP national employment report

21:30: BoE MPC member Bria to speak

23:00: March ISM non-manufacturing PMI

23:30: EIA weekly petroleum status

6日03:00: FOMC minutes (March 14–15 meeting)

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