[Fujitomi] Will the Tokyo stock market continue to rise as US economy remains solid and yen strengthens fade?

US stocks rebounded. The S&P 500 index closed up 0.36% at 2,365.72, and the Dow Jones Industrial Average finished up 56.09 points (0.27%) at 20,663.02. The market was buoyed by weekly initial jobless claims beating expectations and the Philadelphia Fed manufacturing index significantly surpassing forecasts. While U.S. political developments remain uncertain, better-than-expected economic data fostered a more optimistic view of the U.S. economy. The U.S. Federal Communications Commission (FCC) approved moving forward with plans to roll back net neutrality regulations, lifting telecommunications shares and pushing the S&P Telecommunications Services Index up 1.2%. The CBOE Volatility Index (VIX) fell to 14.7.

In the New York currency market, the dollar rebounded. Strong U.S. economic indicators renewed market attention on the possibility of a June rate hike by the Federal Reserve, after concerns about the trajectory of the Trump administration. In Times Square, New York, when reports spread that a car had struck multiple pedestrians, concern over terrorism led U.S. rates to fall sharply, and the dollar/yen briefly fell to 110.72 yen, but when reports said the suspect was an drunken driver, U.S. rates rose and the dollar yen was bought back.

NYMEX WTI crude futures for June settled 28 cents higher, or 0.57%, at $49.35 per barrel. Optimism that OPEC-led supply cuts would be extended supported prices.

Today, the Nikkei stock average is expected to rise, supported by higher U.S. stock prices and a weaker yen with a stronger dollar. Although U.S. political uncertainties persist, most economic indicators exceeded market expectations, contributing to a risk-on mood.

https://www.fujitomi.co.jp/?p=15252

【Bullish factors】

・U.S. stocks rebound, recovering from the previous day's sharp drop

・Dow Jones up (20663.02, +56.09)

・Dollar rebounds, solid U.S. indicators renew expectations for a June rate hike = New York markets

・U.S. May Philadelphia Fed manufacturing index rises, beating expectations

・U.S. initial unemployment claims 232,000 (expectation: 240,000) = Labor Department

・NYMEX crude oil futures continue to advance, supported by expectations of extended coordinated output cuts (49.35, +0.28)

・CME 225 futures rise versus Osaka Exchange (19,605, +35)

・CBOE VIX at 14.66, down from previous day

・Walmart Stores, up 3.22%, Q1 earnings beat expectations

・Strong earnings and leadership in theme stocks show broad buying interest

・Expectations for demand-supply support from BOJ ETF purchases

【Bearish factors】

・European stock markets – decline continues, concerns about the Trump administration persist

・London stock market – declines continue, gains trimmed after easing U.S. political concerns

・European stocks – continues to fall, selling related to Brazil

・Brazil CDS widened, real tumbled on allegations of presidential corruption

・Geopolitical risk in North Korea

・Trump administration lacks clarity in policy management

・Continued emphasis on correcting the U.S. dollar strength

・Global cyberattacks of unprecedented scale

【Other notable points】

・President Trump’s first foreign trip to the Middle East and Europe

・U.S. bond market – U.S. bond yields pull back but rebound remains modest

・European bonds – continued gains amid ongoing risk-off due to U.S. political uncertainties

・NY gold futures – decline for 7 days on profit-taking

・U.S. initial jobless claims 232,000〔Forecast 240,000〕（Previous 236,000）

・U.S. May Philadelphia Fed manufacturing index +38.8〔Forecast +19.5〕（Previous +22.0）

・U.S. April leading index (month-over-month) +0.3%〔Forecast +0.4%〕（Previous +0.4%）

・U.S. 10-year TIPS auction, high yield 0.420%（previous 0.466%）

・U.S. administration to notify Congress of NAFTA renegotiation; start in August

・Treasury Secretary Mnuchin says banks and securities should not be separated

・Trump says “the largest witch hunt in history,” criticizes the appointment of a special prosecutor

・Vehicle rams into Times Square in New York, 18-year-old woman killed, 22 injured

・Former National Security Adviser Flynn’s stance on document requests remains unclear – Senate committee chairman

・Concerns about growth scoring models under tax reform plan – U.S. Treasury Secretary

・FBI Director nomination moves forward; Reuberman (Reyman) is one of the leading candidates – Trump

・Cleveland Fed President reiterates that the Fed should continue raising rates

・Russian Foreign Minister says there is “no secrecy” in U.S. reports on ISIS

・Mexico central bank raises policy rate by 25 basis points contrary to market expectations

・SoftBank invests $1.4 billion in Paytm, the Indian online payments company

・Chinese drone-like objects near Senkaku claimed by coast guard

《Schedule》

10:00 Copper wire shipment statistics (April)

16:00 Foreign visitors to Japan (April)

13:00 Malaysia GDP (Jan-Mar)

15:00 April Germany PPI

17:00 March Eurozone current account (seasonally adjusted)

18:00 Platte ECB Executive Director, speech

21:00 Constancio ECB Vice President, speech

21:30 April Canada CPI

21:30 March Canada retail trade

22:15 Fed St. Louis President Bullard, speech

23:00 May Eurozone consumer confidence

02:40 Feb 20 – Williams, President of the San Francisco Fed, speech

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