【Fujitomi】Nikkei average faces off around 20,000 points

The U.S. stock market showed a choppy session. The S&P 500 index rose modestly and closed at a record high. Energies-related stocks were bought, helped by a rise in oil futures after last week’s oil inventory statistics, which supported the major indices’ downside. The S&P 500 index rose 0.11% from the previous close to 2399.63, while the Dow Jones Industrial Average finished at 20,943.11, down 32.67 points (0.15%). Although President Trump dismissed the FBI director, the market impact was limited. More attention is being paid to how the policy implications of the Trump administration, including fiscal stimulus, affect markets than the dismissal itself.

NYMEX WTI crude June futures finished up $1.45 (3.16%) at $47.33 per barrel from the previous close. A larger rise was driven by the EIA weekly report showing crude inventories fell more than expected.

In the U.S. dollar/yen market, the yen continued to weaken against the dollar for the fourth straight day, finishing at 114.35 yen per dollar (a 0.30 yen decline) from 114.25-114.35 at the previous close. The pullback in the 10-year U.S. Treasury yield after weak results from the quarterly auction and comments by Boston Fed President Rosengren, who said that three more rate hikes this year would be appropriate, accelerated yen selling.

Today, will the Nikkei average hold at the 20,000 level? Tomorrow sees the special settlement index (SQ) for stock index options and May mini-Nikkei futures. If the yen remains in the 114-yen level, trading could increasingly target the 20,000 level as the SQ value. On the other hand, the factors capping gains may be the selling pressure on futures tied to the Nikkei-linked linked bonds. Also, concerns persist about the earnings of major companies like Toyota lacking a strong show.

Italy, Bari: G7 Finance Ministers and Central Bank Governors Conference to be held until the 13th.

【Positive factors】

- U.S. stock market: Nasdaq and S&P 500 fresh highs

- Nasdaq up (6129.14, +8.56)

- Dollar strengthens against the yen as risk appetite rises, hitting a two-month high in New York

- European stock markets: modest gains continue, Greek stocks up for the 12th day

- NY crude futures rebound, supported by EIA oil inventory data (47.33, +1.45)

- CME225 futures rise versus Osaka Exchange (19950, +50)

- Expectations for support from BOJ ETF purchases

【Negative factors】

- U.S. stock market Dow slight decline, weighed by the FBI director dismissal

- Dow Jones down (20943.11, -32.67)

- Toyota revises down its operating profit forecast for this year; increased U.S. competition leads to two consecutive years of revenue and profit declines

- North Korea geopolitical risk

- Uncertainty in Trump administration policy management

- Ongoing efforts to correct U.S. dollar strength

- Moody's downgrades six Canadian banks

【Other notable points】

〇 G7 Finance Ministers and Central Bank Governors meeting (Bari, Italy) until the 13th

- U.S. stock market: mixed, weighed by the sudden dismissal of FBI Director Comey

- U.S. bonds: yields largely flat, after a soft 10-year auction

- European bond market: Greek sovereign yields drop sharply to levels not seen since the 2012 debt restructuring

- NY gold futures rebound, reacting to North Korea and the FBI director’s dismissal

- U.S. Energy Information Administration (EIA) weekly petroleum status report as of 2017/5/5

Crude -5.247 million barrels (Previous week -0.93 million barrels)

Gasoline -1.50 million barrels (Previous week +1.91 million barrels)

Middle distillates (including heating oil) -15.87 million barrels (Previous week -5.62 million barrels)

Crude oil stock at Cushing, Oklahoma

-4.38 million barrels (Previous week -7.28 million barrels)

- MBA Mortgage Applications Index: +2.4% week over week (previous report -0.1%)

- U.S. April Import Price Index: +0.5% month over month (consensus +0.2%) (previous report -0.2%)

- Reserve Bank of New Zealand keeps official cash rate at 1.75%

- Three further rate hikes needed this year; balance sheet reduction also cited by Rosengren of the Boston Fed

- Trump: “North Korea problem can be solved”; confirms close coordination with the new South Korean president

《Schedule》

08:50 March current account balance

Current account

Goods balance

Status of foreign securities and domestic securities trading (weekly, by reporting agencies, two weeks)

11:00 Office vacancy rate (April)

13:30 Corporate bankruptcies (April)

14:00 April Economic Watchers Survey

07:00 Wheeler, Governor of the Reserve Bank of New Zealand (RBNZ) press conference

08:01 April UK RICS housing price balance

15:00 April U.K. PPI (Producer Price Index) for output

16:15 April Swiss CPI

17:00 April ECB Monthly Bulletin

17:30 March U.K. industrial production index

Manufacturing output

17:30 March U.K. trade balance

19:25 Dudley, President of the Federal Reserve Bank of New York, speech

20:00 Bank of England Monetary Policy Committee (MPC) day 2, post-announcement rate decision

20:00 MPC minutes

20:00 Bank of England Quarterly Inflation Report (Monetary Policy Report)

21:30 March Canada new home price index

21:30 April U.S. producer price index

Core index excluding food and energy

21:30 Previous week's initial jobless claims

12th 01:30 Pratt, ECB Executive Board member, speech

12th 02:00 U.S. Treasury to auction 30-year bonds (15 billion dollars)

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