【Fujitomi】Tokyo stock market faces a heavy uptrend? North Korea's Supreme People's Assembly convened

The U.S. stock market moved largely sideways. The S&P 500 index closed up 0.06% from the prior week's close at 2357.16, and the Dow Jones Industrial Average finished up 1.92 points at 20658.02. Geopolitical risks from North Korea and Syria increased, fostering a cautious mood. Reports indicated China had deployed 150,000 troops near the North Korea border, described as a precautionary measure in case the Trump administration attacked North Korea after Syria. By sector, energy rose on firmer crude prices.

NYMEX WTI crude futures for the May contract finished 84 cents higher, or 1.6%, at 53.08 per barrel. The close marked a high not seen since March 7. The backdrop of heightened geopolitical risk supported the strength. Also, Libya’s largest oil field was shut down again, and Russia indicated it is considering extending OPEC-led production cuts, which was viewed positively.

The overnight session forOSE 225 futures June contract ended 50 yen lower than the daytime session at 18750 yen. Today’s Nikkei average is expected to struggle to move higher. If headlines regarding North Korea geopolitics surface, further selling pressure could emerge. The North Korea Supreme People’s Assembly is in session, raising concerns that Kim Jong Un may undertake new provocations such as nuclear tests or missile launches. The 105th anniversary of the birth of Chairman Kim Il-sung on the 15th and the 85th anniversary of the founding of the Korean People’s Army on the 25th are also contributing to vigilance.

https://www.fujitomi.co.jp/?p=14361

【Positive factors】

・Expectations that Bank of Japan ETF purchases will support demand and supply

・Expected fund inflows at the start of the new year

・NY crude oil futures continue to rise; supply concerns amid Middle East tensions (53.08, +0.84)

・Dow Jones rose (20658.02, +1.92)

・Nasdaq rose (5880.93, +3.11)

【Negative factors】

・Trump administration's policy execution remains opaque

・Geopolitical risk from North Korea

・Renewed Greek debt concerns

・Uncertainty surrounding the French presidential election

・European stock markets - small declines; lack of catalysts

・NY forex – indication of a gradual rate hike; dollar’s rebound is modest; USD/JPY around 110.65-70

・CME 225 futures down from Osaka Exchange (18755, -45)

・VIX fear index at 14.05, up from the previous day

【Other notable points】

・Toshiba’s 4-12月 period earnings submission deadline (twice postponed)

・10-year inflation-linked debt auction

・U.S. stock market – largely flat; geopolitics weigh; energy stocks strong

・U.S. Treasury market – rose; Fed Chair hints at gradual rate increases

・NY gold futures – fell back; pullback from November highs predominates

・Fed Chair Janet Yellen

“We do not want rapid rate hikes forced upon us”

“Economic growth expanding at a gradual pace”

“If the economy continues to perform as is, gradual rate increases are appropriate”

“The economy is solid”

“Unemployment rate at 4.5% is slightly below the level of full employment”

“Inflation is near the target”

・Spicer, White House Press Secretary

“Russia supports Syria, North Korea, and Iraq”

・G7 foreign ministers’ meeting calls on Russia to cut support for Assad regime in Syria; UK foreign secretary also hints at additional sanctions

・China orders trading houses to return coal cargoes from North Korea

・U.S. spokesperson says China urged to open beef imports and services market under a “100-day plan”

・Gradual rate hikes and maintaining healthy growth are the objectives, says U.S. Fed Chair

・U.S. Fed's independence at risk from proposed legislation, says Yellen

・Trump to meet with CEOs on the 11th to discuss tax reform and other matters

・White House: additional attacks on Syria possible by the U.S. administration

・World economic outlook improves compared to last year, says IMF Deputy Managing Director

・Toshiba's decision on the November-year audit appears difficult, say sources

・Toyota to invest $1.33 billion in U.S. plants; Trump says it backs manufacturing confidence

《Schedule》

12:00 LNG spot price survey (March)

08:01 U.K. March CBI Retailers' Sales

10:30 Australia March NAB Business Confidence

17:30 U.K. March Consumer Price Index

17:30 U.K. March Producer Price Output

18:00 February Eurozone Industrial Production

18:00 April ZEW Economic Sentiment – Germany

18:00 April ZEW Economic Sentiment – Eurozone

24:00 VISCO – Italian central bank president to speak

February 12, 02:00 U.S. Treasury to auction 20-year bonds ($20 billion)

February 12, 02:45 Kashkari, President of the Minneapolis Fed, to speak

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