【Fujitomi】Nikkei平均, upside momentum heavy展開か with US rates fall focusing on bank stock movements

U.S. stocks were mixed. The S&P 500 Index finished trading down 0.04% at 2,411.80, and the Dow Jones Industrial Average ended down 20.82 points (0.09%) at 21,008.65. Banks led declines after JPMorgan Chase reported weaker trading revenue. JPMorgan said trading revenue for the second quarter fell 15% year over year due to lower volatility. Bank of America also forecast trading revenue this quarter to be 10–12% below last year. JPMorgan fell 2.1%, Bank of America dropped 1.9%, and Goldman Sachs fell 3.3%, the largest decline among Dow components.

NYMEX WTI crude for July delivery settled at $48.32 a barrel, down $1.34 (2.70%) from the previous session. The market was pressured by reports that Libyan production at the Sharara field was gradually recovering.

Today’s Nikkei Stock Average is likely to face downward pressure amid a stronger dollar decline and weak U.S. financial shares. With U.S. long-term rates easing, selling in bank stocks could spread to the Tokyo market as well. Also, today some postal rates and living-related goods will be raised.

https://www.fujitomi.co.jp/?p=15605

[Reasons to Buy]

- The Mothers Index rose for a ninth straight day, active in theme stock rotation

- Dividends from listed companies hit a new five-year high, for five consecutive years

- Expectations for demand/support from BOJ ETF purchases

- Strong earnings and theme stocks show strong appetite for selection

- U.S. Chicago PMI rose to 59.4 in May, the highest since November 2014

- CME 225 futures up versus Osaka Exchange (19670, +10)

[Reasons to Sell]

- Worries about U.S. President impeachment

- Geopolitical risk in North Korea

- Uncertainty in Trump administration policy execution

- U.S. stock market closed lower, bank stocks sold

- Dow Jones down (21,008.65, -20.82)

- Beige Book: optimism fading in some parts

- Bombing in Kabul, Afghanistan

- Dollar/yen at two-week low amid rising U.S. political tensions = NY market (110.80–110.85)

- U.S. inflation expectations retreating on Beige Book

- NY crude oil futures down again, Libya showing signs of production recovery (48.32, -1.34)

- VIX fear index at 10.41, up from the previous session

[Other Points to Watch]

- 10-year U.S. Treasury auction

- European-China summit (through the 2nd)

- European stocks mixed; U.S. economic data may pull European markets lower

- U.S. bond market yields fall; housing indicators soften, reducing expectations for two more rate hikes this year

- European bonds retreat; euro area CPI briefly fell but recovered

- NY gold futures rebounded, dollar weakness supportive

- U.S. May Chicago Purchasing Managers’ Index 59.4 vs 57.0 expected (previous 58.3)

- U.S. MBA Mortgage Applications Index (week over week) -3.4% (previous +4.4%)

- U.S. April Existing Home Sales Pending Home Sales Index +1.3% vs +0.5% expected (previous -0.8%)

- President Trump declares U.S. will withdraw from the Paris Agreement = sources

- President Trump seeks congressional testimony from former advisor regarding Russia probe

- Trump requests end to FBI investigation; Comey to testify before Congress = reports

- Brazil’s central bank cuts policy rate to 10.25%, a three-year low

- U.K. general election: Conservative lead widened by 10 points = YouGov

- U.K. general election: Lead of Prime Minister May’s Conservative Party narrows to 3 percentage points — YouGov

- Toshiba to counteract with WD, returns memory business assets to the main company

08:50 Corporate sector statistics for Q1–Q3

08:50 Net foreign and domestic securities transactions (week-by-week, reported by agencies)

10:30 Harada Yasuo, Bank of Japan, remarks

16:00 Bond Market Survey (May 2017, Bank of Japan)

09:10 Williams, President of the San Francisco Fed, speech

10:30 Australia private capital expenditure (Q1)

10:30 Australia retail sales (April)

10:45 Caixin China manufacturing PMI (May)

14:45 Switzerland real GDP (Q1)

15:00 U.K. Nationwide housing prices (May)

16:15 Bill Roche, France央銀総裁, speech

16:15 Switzerland retail sales (April)

16:30 Switzerland SMI buying manager index (May)

16:50 France manufacturing PMI (May) refined

16:55 Germany manufacturing PMI (May) refined

17:00 Eurozone manufacturing PMI (May) refined

17:30 U.K. manufacturing PMI (May) (forecast 56.5)

18:00 Costa Rica/Portugal央銀総裁, speech

20:30 U.S. May Job cuts reported by Challenger, Gray & Christmas

21:00 Brazil GDP (Q1)

21:00 Powell, Federal Reserve Board Chair, speech

21:15 May ADP national employment report

21:30 Initial jobless claims for the previous week

23:00 ISM manufacturing index (May)

23:00 U.S. construction spending (April)

24:00 EIA weekly petroleum status report

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