Tokyo market is quiet due to Golden Week! "Key points and events schedule for the week of May 4"
This week Tokyo is expected to have a subdued market due to the Golden Week holidays.
Last year's Golden Week drew attention for the possibility of a flash crash.
As a result, a flash crash did not occur, but after Golden Week there was a Trump-type hawkish rhetoric and tariff comments that significantly risk-off'ed the market.
This year, since the market is not in its normal state even before Golden Week, opinions are split between a view that a flash crash will not occur and a view that a flash crash is more likely because the market is already damaged.
Especially with the focus on the coronavirus, some say that the lack of attention to potential flash crashes could itself be a factor in causing one.
In Japan, the state of emergency is expected to be extended, and because people are refraining from going out, there may be less of a Golden Week atmosphere.
◎ This Week’s Points of Attention
1) Policy Interest Rates
RBA Board of Governors
Australia’s coronavirus cases are beginning to ease, and considerations are being made to relax COVID-related restrictions. What does this imply for Australia’s future economy?
Also, will the RBA release additional easing measures?
We are focusing on these two points.
If zero rates, negative rates, or quantitative easing and other additional easing are announced, there is attention that Australian dollar selling could resume.
BOE (Super Thursday)
The upcoming UK monetary policy announcement will be accompanied by the quarterly Inflation Report.
The UK’s economy remains stagnant due to lockdowns and restrictions from the coronavirus.
There is keen interest in whether additional easing will be announced and what the Inflation Report indicates about the future economic outlook and the extent of negative growth anticipated.
2) U.S.-China Relations
The U.S. and China are at odds over responsibility for the spread of the coronavirus.
There was chatter that the U.S. might seek damages from China and that China could nullify its U.S. treasury holdings as a substitute for paying damages.
The idea was highly unlikely, but such rumors show how tense U.S.-China relations have become.
If a U.S.-China war were to resume, risk-off could advance again, and stock markets battered by the pandemic could fall sharply.
In the early part of the week, Tokyo markets are subdued due to Golden Week.
There is also a possibility that risk-off could be triggered by tensions between the U.S. and China.
Attention is especially needed on statements and tweets from President Trump.
3) Coronavirus
The pace of coronavirus infections seems to be slowing, but infections have not fallen to zero.
In Europe and the U.S., restrictions are being eased and economic activity is resuming in some areas.
In China, many people are moving around, and there are situations where crowded tourist destinations are congested.
This week, many regions are loosening restrictions and restarting the economy, which could reduce risk-off sentiment.
However, looking at the Spanish Flu, there were second and third waves of infections.
As economic activity restarts, there is a watchful eye on whether the coronavirus could spread again.
4) North Korea
Last week, rumors of Kim Jong-un’s death circulated, drawing attention to who would succeed him.
Towards the weekend, headlines claimed Kim attended a ceremony.
However, there are also talks that he may be a figurehead, and further developments are awaited.
There are also views that this cloaking could be to draw the U.S.’s attention, and missiles could be launched again to attract attention.
We should stay alert to North Korea’s movements.
5) Oil Prices
Oil prices show no signs of rising.
There are rumors that wars could occur to push oil prices higher.
Some countries are considering production cuts.
Whether there will be a coordinated cut and whether oil could spark a price war are points to watch, as related companies could go under if prices stay this way.
There are also talks of coordinated cuts among nations, so watch how each country responds.
6) Key Indicators
This week, employment statistics reflecting the impact of coronavirus and social distancing measures will be released.
Weekly initial jobless claims continue to show extraordinarily high numbers.
Thus, there is keen interest in how high the unemployment rate might rise.
In the U.S., where consumer spending is crucial, ISM Non-Manufacturing (services) Index will be released to show business conditions.
There is focus on how deteriorated it is and whether the actual results will beat or miss forecasts.
◎ This Week’s Event Schedule
May 4 (Monday)
16:00 TRY Turkey CPI (Consumer Price Index)
16:45 EUR Italy Manufacturing PMI (revised)
16:50 EUR France Manufacturing PMI (revised)
16:55 EUR Germany Manufacturing PMI (revised)
17:00 EUR Eurozone Manufacturing PMI (revised)
May 5 (Tuesday)
13:30 AUDRBA Board of Governors Policy Rate and Statement Release
16:30 SEK Sweden GDP
17:30 GBP UK Services PMI
21:30 USD U.S. Trade Balance
21:30 CAD Canada Trade Balance
22:45 USD Services PMI
23:00 USDISM Non-Manufacturing Index
23:00 USD Evans, Chicago Fed President Speech
May 6 (Wednesday)
03:00 USD Bostic (Atlanta Fed President) and Bullard (St. Louis Fed President) Speeches
07:45 NZDNZ Jobs Data (Change in Employment and Unemployment Rate)
10:30 AUD Australia Retail Sales
10:45 CNY Caixin Services PMI
16:45 EUR Italy Composite and Services PMI (revised)
16:50 EUR France Composite and Services PMI (revised)
16:55 EUR Germany Composite and Services PMI (revised)
17:00 EUR Euro Area Composite and Services PMI (revised)
17:30 GBP UK Construction PMI
18:00 EUR Euro Area Retail Sales
21:15 USDADP Employment Report
23:30 USD Crude Oil Inventories
May 7 (Thursday)
02:30 USD Bostic Speeches
10:30 AUD Australia Trade Balance
15:00 GBPUK BoE Policy Rate, MPC Vote Distribution, Statement, and Inflation Report Release
20:00 MXN Mexico CPI
21:30 USD U.S. Initial Jobless Claims
23:00 CAD Ivey PMI
May 8 (Friday)
05:00 USD Powell (Federal Reserve) Speeches
10:30 AUDRBA Monetary Policy Report
21:30 USDNFP Employment, Average Hourly Earnings, and Unemployment Rate
21:30 CADCanada Employment Change and Unemployment Rate
May 9 (Saturday)
02:00 USD Baker Hughes Rig Count
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