【Fujitomi】Nikkei is firm but on alert for the 85th anniversary of the founding of the Korean People's Army of North Korea

The U.S. stock market rebounded. The S&P 500 Index rose 1.08% to close at 2374.15, and the Dow Jones Industrial Average finished up 216.13 points (1.05%) at 20,763.89. The Nasdaq Composite rose 1.24% to 5,983.82, a fresh high. With the results of the first round of the French presidential election, a sense of reassurance spread in the U.S. stock market as well. Also, President Trump is set to unveil the broad outlines of tax reform on the 26th. The Wall Street Journal (WSJ) electronic edition reports that President Trump will announce a plan to cut the corporate tax rate from 35% to 15%. On the 25th, Treasury Secretary Mnuchin and NEC Chairman Cohn held a meeting to discuss tax cuts with Trump and others. Sector-wise, the rise was led by the financial sector, with banks such as Bank of America and JPMorgan Chase.

NYMEX WTI crude oil June futures settled at 49.23 dollars per barrel, down 39 cents (0.79%) from the previous week’s close, the lowest since March 28, amid growing uncertainty over an extended OPEC-led production cut.

Today’s Nikkei average is expected to benefit from higher European and U.S. equities, but tensions surrounding North Korea have intensified again, raising the risk-off mood. The 25th marks the 85th anniversary of the founding of the Korean People’s Army, and there is a possibility of missile launches or a nuclear test, which has heightened caution in the stock market. In Tokyo, a three-nation meeting of top U.S., Japan, and South Korea representatives on North Korea will be held.

https://www.fujitomi.co.jp/?p=14709

【Reasons to Buy】

・U.S. stock market — reassurance after the French election and Nasdaq hits a new high

・Dow Jones up (20,763.89, +216.13)

・Nasdaq up (5,983.82, +73.30)

・European stocks broadly higher after the first-round results of the French presidential election

・NY Forex — Dollar/yen in the upper 109s, cross-yen gains narrowed

・New York FX market — Euro surges as political risk fades after the first round of French presidential election

・VIX fear gauge at 10.84, significantly down from the previous day

・IFO indexes in Germany at a six-year high in April

・Expectations for continued support from BOJ ETF purchases

【Reasons to Sell】

・Geopolitical risk related to North Korea

・North Korea commemorating 85th year of army founding, sharpening confrontation with the U.S.

・Uncertainty in Trump administration policy implementation

・Greece debt crisis reemerging

・NY crude oil declines (49.23, -0.39)

・CME 225 futures fall versus Osaka Exchange (18870, -70)

【Other Points of Note】

・Three-nation representatives meeting on North Korea (Tokyo)

・Australia and New Zealand markets closed for ANZAC Day

・U.S. bond market continues to fall; risk-off fades after French presidential election

・European bonds — German and British bonds fall following French presidential election results

・NY gold futures retreat as political risk in France fades

・AsenTech to list on the Tokyo Mothers market (IPO price: 2,000 yen)

・Trump: “Cannot accept the status quo,” calls for additional sanctions on North Korea

・New sanctions on North Korea, U.N. Security Council ready to act — Trump

・U.S.-Germany leaders hold phone talk to discuss urgent security concerns related to North Korea

・François Fillon of the French Republican Party retires from a leading role

・François Hollande calls Macron’s support in the runoff

・In the French presidential runoff, Macron support at 60% in polls

・Budget negotiations continue over wall construction on the U.S.-Mexico border — White House

《Schedule》

08:50 March Service Price Index for business

10:00 Copper products production statistics (March)

14:00 Meteorological Agency to release a three-month forecast

15:45 April business confidence for French companies

22:00 U.S. housing price index for February

22:00 February Case-Shiller housing price index

23:00 March U.S. new home sales

23:00 April U.S. Consumer Confidence Index

23:00 April U.S. Richmond Fed Manufacturing Index

26th 02:00 U.S. Treasury to auction 2-year notes (USD 26 billion)

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