【Fujitomi】Nikkei average declines for the fourth day? Loss due to political tensions in Europe and the United States; reluctance toward a rising yen

The U.S. stock market closed lower. The S&P 500 index finished down 0.12% from the previous business day at 2412.91, and the Dow Jones Industrial Average fell 50.81 points (0.24%) to close at 21029.47. The Nasdaq-100 rose. After eight consecutive trading days of gains, it reached a new all-time high. Crude oil prices fell, weighing on resource-related sectors, which underperformed. On the other hand, signs of continued consumer spending limited the decline in stock indices. U.S. April personal consumption and income expanded as forecasts expected, and the PCE deflator (year over year) also matched forecasts, marking two consecutive months of slowdown. The U.S. consumer confidence index underperformed versus expectations, slipping for the second month, though the level remained high, suggesting healthy consumer sentiment. Also, according to ABC News, Cohen, President Trump’s counsel and attorney, is being investigated by both the House and Senate over the RussiaGate issue. The ongoing opacity surrounding the Trump administration seems likely to continue weighing on the upside.

NYMEX WTI futures for July settled at 49.66 dollars per barrel, down 14 cents (0.28%) from the previous close. Baker Hughes reported that U.S. domestic rig count rose for the 19th consecutive week. Market anticipation that increased domestic supply in the U.S. could offset OPEC-led efforts to coordinate production cuts was a concern.

Today’s Nikkei Stock Average may fall for the fourth straight day. Concerns include a stronger yen, uncertainty ahead of the Italian election, Greece's debt issues, reports that British Prime Minister May’s Conservative Party may fail to maintain a majority, and renewed criticisms of Germany by President Trump, which deepen divisions between the U.S. and Europe. However, expectations of the Bank of Japan buying ETFs may provide some support at the downside.

China’s May Manufacturing PMI will be released. With concerns over China’s economy remaining weak, a deterioration could trigger cautious behavior in Tokyo’s market regarding demand.

[Buying factors]

- Amazon U.S. stock surpasses $1,000; analysts expect further gains

- Case-Shiller home price index for March exceeds expectations

- Mothers Index extends gain for an eighth day; brisk rotation into theme stocks

- Domestic capital investment expected to return to double digits for the first time in four years

- Dividends of listed companies reach a record high for five consecutive years

- Market prospects of demand supported by BoJ ETF purchases

- Strong earnings and attraction to theme stocks

- Government focusing on five priority areas including AI

[Selling factors]

- U.S. stock market falls, energy and financial stocks cheaper; S&P and Nasdaq pull back for the first time in eight days

- Dow Jones falls (21029.47, -50.81)

- Dollar declines, safe-haven buying in yen and Swiss franc amid stock declines = U.S. market

- House investigations into Russia allegations include President Trump’s counsel

- London stock market falls; pound recovers as exporters sell

- European stocks continue to slide amid political uncertainty and weak data

- NY crude oil futures fall; prices struggle since the OPEC meeting (49.66, -0.14)

- VIX fear gauge at 10.38, up from the previous day

- CME 225 futures down versus Osaka Exchange (19625, -45)

- Caution over U.S. presidential impeachment

- Geopolitical risk on the Korean Peninsula

- Trump administration’s policy operations remain opaque

[Other notable points]

- U.S. bond market: yields fall on month-end bargain hunting; market increasingly views only one rate hike this year

- European bonds continue to rise; German CPI weak

- NY gold futures mix with profit-taking as political instability keeps highs in check

- Bitcoin lacks intrinsic value as price fluctuates

- U.S. April personal income (MoM) +0.4% [Forecast +0.4%] (Previous +0.2%)

- U.S. April personal consumption expenditures (MoM) +0.4% [Forecast +0.4%] (Previous 0.0%)

- U.S. April core PCE deflator (MoM) +0.2% [Forecast +0.1%] (Previous -0.1%)

- Dallas Fed Manufacturing Activity Index for May +17.2 (Previous +16.8)

- U.S. Department of Defense to further consider expanding in-flight laptop ban; no announcements this week

- Trump criticizes German policy, highlighting deeper cracks

- Trump calls for changing Senate rules to accelerate policy enactment

- Trump considering staff changes; communications aide resigns

- FOMC minutes show two Fed departments favoring rate hikes before May meeting

- Brainerd (FRB) says early rate hikes are possible while watching soft inflation

- May YouGov poll suggests British PM May’s Conservative Party may fail to hold a majority

- May German CPI slows; ECB withdrawal of easing pressure eases

- South Korean president orders investigation into additional THAAD launchers, without prior notice

- U.S.-China prep for July summit

《Schedule》

08:50 April Industrial Production速報

13:30 Petroleum Statistics (April)

14:00 April New Housing Starts

17:00 Public release on future large-scale government bond buying operations (Bank of Japan)

19:00 Foreign exchange intervention status (intervention results)

08:00 Wheeler, RBNZ Governor, press conference

08:01 May UK Consumer Confidence Index

10:00 May China Manufacturing PMI

10:00 May China Non-Manufacturing PMI

10:00 May NABE Corporate Confidence

15:00 April German Retail Sales Index

15:45 May French CPI flash

15:45 April French PPI

16:20 ECB President Christine Lagarde Speech

16:55 May German Unemployment

17:30 Visco, Italian Central Bank President, Speech

17:30 April UK outstanding consumer credit

17:30 April UK M4 money supply

18:00 April euro area unemployment

18:00 May euro area HICP flash

20:00 MBA Mortgage Applications Index

21:00 Kaplan, Dallas Fed President, Speech

21:00 India Q1-Q3 GDP

21:00 April South Africa trade balance

21:30 March Canada GDP

1-3月期カナダ GDP

21:30 Merkel, German Chancellor, and Lagarde, ECB Executive Board member, speeches

22:45 May U.S. Chicago Purchasing Managers Index

23:00 April U.S. Pending Home Sales Index (contract signings; forecast: MoM +0.5%)

1日03:00 U.S. Beige Book economic report

TBD Brazil Central Bank policy rate decision

☆ For market color, please refer to Twitter. https://twitter.com/fujitomi_8740