【Fujitomi】Nikkei Stock Average: Developments with Eye on FX Market; U.S. stocks and oil decline weigh on sentiment

The U.S. stock market declined. The Nasdaq index ended barely higher, up only 0.23%. The S&P 500 finished 0.17% lower at 2338.17, and the Dow Jones industrial average fell 118.79 points (0.57%) to 20404.49. The energy sector came under pressure, with IBM dropping sharply after a miss on revenue and a plunge in crude prices weighing on the market; IBM fell 4.9% as first-quarter revenue missed market expectations for the fifth consecutive quarter. U.S. crude futures also declined about 4% due to concerns such as a rise in U.S. gasoline inventories, the EIA’s weekly data showing production reaching the highest since August 2015. The S&P Energy Index slid 1.4%. Morgan Stanley rose 2.0% and held steady, as its quarterly results showed substantial profit growth, easing some of the disappointment from Goldman Sachs’ results the previous day.

NYMEX WTI May futures settled at 50.44 dollars per barrel, down 1.97 dollars (3.76%) from the previous day. The EIA’s weekly statistics pointed to a rise in gasoline inventories for the first time since February and production reaching the highest level since August 2015, weighing on sentiment.

Market attention is turning toward the French presidential election on the 23rd, where the first round will be held, with many expecting the run-off on May 7. Until the results are known, it does not look like a risk-on mood will return. Today’s Nikkei average is expected to continue watching the currency market. On the 20th, a busy day for corporate settlements, mid- and end-of-day settlements occurred, and domestic importers and others were seen selling yen and buying dollars ahead of the 10 a.m. midpoint settlement. Since earlier this week, life insurers and pension funds have been buying, which is reassuring.

https://www.fujitomi.co.jp/?p=14613

【Positive factors】

・Expectations for supply-demand support from Bank of Japan ETF purchases

・U.S. stock markets – Nasdaq rebounded (5863.03, +13.56)

・IMF raises China’s 2017 growth forecast by 0.1 point to 6.6%

【Negative factors】

・Dow and S&P declines, energy shares selling due to oil price drop; IBM plunge

・Dow falls to 20,404.49 (-118.79)

・IBM down sharply by 4.92% as 1Q results miss expectations on revenue for the fifth straight quarter

・NY crude futures extend losses, U.S. gasoline inventories rise for the first time in nine weeks (50.44, -1.97)

・London stock market falls again, pounds weighing

・CME 225 futures down versus Osaka Exchange (18,390, -20)

・VIX fear index at 14.93, up from the previous day

・Trump administration faces policy-management uncertainty

・Geopolitical risk with North Korea

・Greece debt crisis rekindling

・Uncertainty ahead of the French presidential election

【Other notable points】

○ G20 finance ministers and central bank governors meeting in Washington through the 21st

・U.S. Treasury auction terms for 2-, 5-, and 7-year notes

・U.S. Treasuries retreat, adjusting from the intraday low of the year

・NY gold futures retreated as the dollar strengthens and stocks stay firm

・European bonds rebound; the yield gap between German and French bonds narrowed

・U.S. Energy Information Administration (EIA) weekly oil inventory as of 2017/4/14

Crude oil −1,034,000 barrels (week prior −2,166,000)

Gasoline +1,542,000 barrels (week prior −2,973,000)

Distillates (including heating oil) −1,955,000 barrels (week prior −2,153,000)

Crude oil delivery location: Cushing, Oklahoma crude stock

−778,000 barrels (week prior +276,000)

・U.S. discusses re-designating North Korea as a state sponsor of terrorism, says Secretary of the Treasury

・Ryan says military options should remain for North Korea issue

・Ryan notes possible delays to tax reform schedule

・U.S. rate hikes will have manageable effects on the global economy, says Fed Vice Chair

・U.S. Fed likely to begin shrinking its balance sheet soon, says Boston Fed President

・ECB tapering should not be stopped yet, according to French and German central bank chiefs

・British Parliament approves June general election; PM May calls for unity to secure Brexit

・Scottish first minister says independence referendum could not be blocked if election wins

・ECB and central banks to continue non-traditional measures; expansion of responsibilities discussed

・Rising risk of mass unemployment in China; policy response needed, says State Council

・U.S. and Australia to strengthen cooperation against North Korea

・Warning of intensified competition among financial institutions; risk of governance instability, says BOJ

・Mnuchin says U.S. Treasury Secretary, FT report

“The President will never push the dollar down deliberately.”

“ Intervening to manipulate exchange rates for U.S. interests would not be considered currency manipulation.”

《Schedule》

08:50 March Trade Statistics

08:50 Conditions of foreign securities trading (weekly, reporting agencies)

14:30 Department store sales (nationwide and Tokyo area, March)

16:00 Convenience store sales (March)

07:45 New Zealand Q1 2017 Consumer Price Index

15:00 German PPI (March)

18:00 Euro area February Construction Spending

21:00 Powell speaks as a member of the Federal Reserve Board

21:30 U.S. initial jobless claims for the previous week

21:30 U.S. Philadelphia Fed Business Outlook for April

23:00 Euro area April Consumer Confidence

23:00 U.S. leading indicators for March

Janney: 00:30 on the 21st, Carney, Governor of the Bank of England, speaks

21st 05:00 U.S.-Japan Treasury Secretary talks

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