【Fujitomi】Nikkei Average rebounds? Responding to US stocks higher and a trend of yen weakness is favorable

The U.S. stock market rebounded. In addition to generally favorable corporate earnings, the market was buoyed by comments from Treasury Secretary Mnuchin emphasizing that boosting economic growth is the top priority and that a large-scale tax reform would be presented soon. The S&P 500 index closed up 0.75% at 2355.84 from the previous day, and the Dow Jones Industrial Average finished at 20,578.71, up 174.22 (0.85%). The Nasdaq Composite rose 0.91% to 5,916.777, a fresh high. Last week’s jobless claims exceeded expectations, and the Philadelphia Fed Manufacturing Index came in below expectations. Following Mnuchin’s remarks, financial stocks such as Goldman Sachs and JPMorgan Chase rose sharply.

NYMEX WTI crude oil May futures ended at 50.27 dollars per barrel, down 0.17 (0.34%) from the previous day, marking a low since April 3. The front month was the last trading day for that contract, while the June contract, the active month, finished at 50.71, down 0.14. Market nerves were raised by the EIA weekly report showing a smaller-than-expected draw in crude inventories and an unexpected build in gasoline stocks.

Today’s Nikkei Stock Average may rebound on the back of higher U.S. stocks and a weaker yen. After initial buying, a cautious mood is expected ahead of the French presidential election on the 23rd. On the other hand, ongoing heightened vigilance toward North Korea and other risks suggests that currency movements will require attention.

https://www.fujitomi.co.jp/?p=14639

【Positive factors】

・U.S. stock market rises, Nasdaq hits new high, supported by solid earnings

・Dow Jones rises (20,578.71, +174.22)

・Nasdaq rises (5,916.78, +53.74)

・Tax reform proposal to be announced soon — Mnuchin

・Dollar buys on anticipation of U.S. tax reform

・U.S. leading index for March +0.4% (month over month) [ estimates +0.2% ] (previously +0.6%)

・European stock markets up; French stocks surge on election optimism

・CME 225 futures up versus Osaka Exchange (18,570, +100)

・Volatility index VIX at 14.15, down from the previous day

【Negative factors】

・New York crude futures market slightly lower, concerns over production cuts vs. rising U.S. supply (50.27, -0.17)

・U.S. initial jobless claims 244,000 vs. expected 242,000 (previous 234,000)

・U.S. March Philadelphia Fed Manufacturing Index +22.0 vs. forecast +25.0 (previous +32.8)

・Japan Post Holdings fears of large losses

【Other points】

○ 23rd — First round of French presidential election

・G20 finance ministers and central bank governors meeting (Washington, final day)

・IMF and World Bank spring meetings (Washington, through the 23rd)

・Brazil (Tiradentes Day) holiday

・Samsung Electronics of Korea to release Galaxy S8

・Euro rises against the dollar ahead of the French election, buying back in New York market

・U.S. Treasury market declines further, selling ahead of the French election and Mnuchin remarks

・European bonds fall further, with notable rebounds in German and French bonds

・NY gold futures rebound; despite some intraday weakness, selling ahead of the French election is limited

・Inclusion of Chinese stocks in the MSCI index is supported by BlackRock

・France gun attack; Islamic State claims responsibility — AMAQ News

・Gunfire on the Champs-Élysées; one officer and the suspect killed

・U.S. administration intends to impose import duties on countries imposing tariffs — NEC chairman

・U.S. to investigate imports of steel products from China and other countries to assess security risks

・IMF managing director says cooperation with the Trump administration on trade reforms is possible

・Three rate hikes this year remain a favorable baseline scenario — Dallas Fed President

・Scholten (Schlanke) German Finance Minister pressures ECB to ease policy

・Mnuchin, U.S. Treasury Secretary

“We are working around the clock on tax reform, and the timing of the announcement will be close.”

“Revenue loss from tax cuts will be offset by economic growth.”

“Tax reform is likely to pass by the end of this year.”

“Regardless of whether health care reform is enacted, we will proceed with tax reform.”

《Schedule》

08:50 Major banks lending survey (April, Bank of Japan)

13:30 February third industrial production index (forecast: +0.3% MoM)

16:00 April France manufacturing PMI preliminary

16:00 April France service PMI preliminary

16:30 April Germany manufacturing PMI preliminary

16:30 April Germany services PMI preliminary

17:00 April euro area manufacturing PMI preliminary

17:00 April euro area services PMI preliminary

17:00 February euro area current account (seasonally adjusted)

17:30 March U.K. retail sales

17:30 March Hong Kong CPI

20:45 Bank of England MPC member sermon

21:30 March Canada CPI

22:30 Kashkari, President of the Federal Reserve Bank of Minneapolis, speech

23:00 March U.S. existing home sales

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