【Fujitomi】Nikkei average mindful of the year-to-date low, Ministry of Foreign Affairs cautions those staying in Korea

The U.S. stock market moved lower. The Dow Jones Industrial Average fell more than 140 points at one point. The S&P 500 stock index closed down 0.1% from the previous day at 2,353.78, and the Dow finished at 20,651.30, down 6.72. There were concerns about the Trump administration potentially attacking Syria again or North Korea. Defense-related stocks were bought, helping to support the index. Reports indicated that Syrian government aircraft dropped barrel bombs on areas controlled by anti-government forces, and North Korea warned that it would launch a nuclear attack on the United States if there are signs of a preemptive strike by the U.S.

NYMEX WTI crude oil futures for the May contract finished up 32 cents (0.6%) at 1 barrel = 53.40 dollars, the highest close since March 1. It was reported that Saudi Arabia is highly likely to support extending OPEC production cuts, which eased market sentiment.

Today's Nikkei average is expected to continue its decline, approaching the intraday low for the year on January 6 (10,597 yen). U.S. pressure on Syria and North Korea has intensified, increasing geopolitical risk in the market. The Ministry of Foreign Affairs issued a “Spot Information” urging residents and travelers in Korea to be cautious about the Korean Peninsula situation. There are currently no danger advisories calling for travel avoidance to Korea or evacuation of residents. This information is posted on the Ministry of Foreign Affairs’ Overseas Safety homepage. The spot information notes that “North Korea continues to conduct nuclear tests and missile launches.” President Trump stated that if China does not work to curb North Korea’s threats, the United States will act. The U.S. Navy is moving the aircraft carrier Carl Vinson toward the Korean Peninsula.

https://www.fujitomi.co.jp/?p=14392

【Positive factors】

・NY crude oil futures – continuing to rise; Saudi may propose extending production cuts (53.40, +0.32)

・Expectations of support from the Bank of Japan’s ETF purchases

【Negative factors】

・U.S. stock market – slight decline as geopolitical risk remains a burden

・Dow Jones down (20,651.30, -6.72)

・Dollar at the 109 yen level due to geopolitical risk and a decline in U.S. Treasury yields = New York market

・CME 225 futures fall versus Osaka Exchange (18,640, -70)

・Volatility index VIX at 15.08, up from the previous day

【Other watchpoints】

・European stock markets mixed; British stocks supported by resources sector with a modest advance

・U.S. bond market continues to rise as geopolitical risk keeps yields in check

・NY gold futures rebound to a five-month high on geopolitical risk

・European bonds rise as risk-averse demand for bonds remains strong

・Russia internationally isolated over Syria situation, according to the U.S. President's spokesperson

・If a medical reform bill passes first, tax reform benefits expand — U.S. President on TV

・North Korea’s actions will not be tolerated; Trump clearly conveys this — White House

・U.S. AAА rating confirmed with a stable outlook — Fitch

・U.S. policy rate unchanged; 3Fed banks holding firm ahead of March FOMC — Minutes

・If China cooperates to resolve North Korea issue, trade terms become favorable — U.S. President

・Trump meets with business leaders and reiterates financial regulatory reforms

・French presidential election: far-left Melenchon rises to third place, potential one-on-one with Le Pen

・JMSDF to conduct joint exercises with U.S. aircraft carriers heading toward the Korean Peninsula — sources

・Three to four rate hikes this year would be appropriate — President of the Federal Reserve Bank of San Francisco, interview in German newspaper

・Toshiba’s full-year results possible to be “unusual,” audit review may not be completed — President

《Schedule》

08:50 February machinery orders

08:50 March corporate goods price index

08:50 Lending and deposit trends (March, Bank of Japan)

10:00 Weekly Economic Report (as of April 10, Bank of Japan)

17:00 Bank of Japan’s holdings of government bonds by issue

17:00 BoJ's purchases of government short-term securities by issue

10:30 March China Consumer Price Index

10:30 March China Producer Price Index

15:00 March German Wholesale Price Index (WPI)

17:30 March U.K. unemployment statistics

17:30 January–February U.K. unemployment rate

17:30 Carney, Governor of the Bank of England, speech

20:00 February South Africa retail sales

20:00 MBA Mortgage Applications Index

21:30 March U.S. import price index

23:00 Bank of Canada policy rate announcement

23:00 Kaplan, President of the Dallas Fed, speech

23:30 EIA weekly petroleum status report

Jan 13 00:15 Powell, BOC Governor, press conference

Jan 13 02:00 U.S. Treasury 30-year bond auction (12.0 billion)

Jan 13 03:00 March U.S. monthly budget statement

TBD Brazilian Central Bank policy rate announcement

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