【Fuji Tomi】Nikkei average rebounds? Yen appreciation eases and U.S. stocks rise welcomed

The U.S. stock market recovered for the first time in four trading days amid light trading, with the S&P 500 index finishing at 2,349.01, up 0.86% from the previous close, and the Dow Jones Industrial Average rising 183.67 points (0.89%) to close at 20,636.92. In an interview with the Financial Times, U.S. Treasury Secretary Mnuchin was cited as showing willingness to secure the fiscal stimulus of about $1 trillion without relying on border-adjustment taxes that would burden importers. As a result, U.S. interest rates rose, boosting the financial sector led by banks, and real estate also trended higher.

NYMEX WTI futures for the May contract closed at $52.65 per barrel, down 53 cents (1.00%) from the previous close, amid light trading and concerns about increased shale oil production.

In an interview with the British newspaper FT, Mnuchin said a stronger dollar would be good in the long term, sending U.S. interest rates higher (2.206% → 2.265%), and the dollar/yen rose to 109.05 in the New York currency market.

Today’s Nikkei average likely rose on the back of higher U.S. stocks and a pause in the yen’s strength. However, mood remains cautious about continuing North Korea tensions and the U.S.-Japan Economic Dialogue, which could cap any further gains as it runs until tomorrow in Tokyo.

https://www.fujitomi.co.jp/?p=14552

【Buying factors】

・U.S. stocks rebounded, led by banks and tech stocks

・Dow Jones rose (20,636.92, +183.67)

・U.S. long-term yields rise with dollar-buying in the New York market; USD/JPY around 109.00–109.05

・CME 225 futures up versus Osaka Exchange (18,475, +165)

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

【Selling factors】

・NY crude oil futures continued to fall, possible rise in U.S. shale drilling (52.65, -0.53)

・North Korea missile tests to continue; U.S. action could lead to full-scale war — senior official, BBC

・U.S. April NY Fed manufacturing index +5.2 vs. expectations +15.0 (previously +16.4)

・April NAHB/Wells Fargo housing market index 68 (National Association of Home Builders; expected 70)

・Trump administration shows policy management uncertainty

・North Korea geopolitical risk

・Greece debt crisis rekindling

・Uncertainty ahead of the French presidential election

【Other notable points】

・Vice President Pence to visit Japan for economic dialogues with Deputy Prime Minister and Finance Minister Aso

・U.S. Treasury market — 10-year Treasuries fell as equities rose, selling of long-term bonds

・Gold futures in New York — continued rise on risk of conflict between the U.S. and North Korea

・European stock markets — closed for Easter Monday

・London stock market — closed for Easter Monday

・Despite the tax reform schedule delay, a stronger dollar in the long term remains positive — Treasury Secretary

・Potential lack of market disruption from the Fed’s balance sheet reduction — Vice Chair

・Despite the tax reform schedule delay, a stronger dollar in the long term remains positive — Treasury Secretary

《Schedule》

U.S.-Japan Economic Dialogue (Tokyo, until the 19th)

10:30 April meeting minutes of the Reserve Bank of Australia (RBA)

19:45 Bank of America Q1 earnings

20:30 Goldman Sachs Q1 earnings

21:30 February Canadian investments in securities

21:30 March U.S. housing starts

Building permits

22:00 George, President of the Federal Reserve Bank of Kansas City, speech

22:15 March U.S. industrial production index (forecast: +0.4% MoM)

Utilization rate

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