• European equities trade lower as further emission scandals hamper Auto names and the FTSE falls victim to losses in materials names
  • JPY is the main mover in FX markets after BoJ source reports suggesting the central bank will add negative rates to its institutional loan programme
  • Looking ahead, highlights include US manufacturing PMI and Canadian CPI as well as comments from ECB's Constancio and Mersch

ASIA

Asia traded with a sombre tone following weak earnings releases on Wall St, coupled with profit taking seen in the region. Nikkei 225 (+1.2%) initially fell from 2-month highs as participants booked profits while large exporters have been pressured with Sony and Toshiba reeling on impairment losses and Mitsubishi Motors shares crashed to a record low on the fuel efficiency scandal, however the index rallied in late trade after reports the BoJ are said to be considering negative rates for its lending programs. ASX 200 (-0.7%) and Shanghai Comp (+0.2%) are lower amid weakness across the commodities complex, although the region’s bourses briefly attempted a recovery alongside a rebound in oil, which re-approaches USD 44/bbl and after China conducted a large net weekly liquidity injection of CNY 680bln. 10yr JGBs are marginally higher amid cautious sentiment in Asia and the BoJ also in the market for around JPY 1.2trl in government debt, while yields in the super-long end were pressured with the 40yr yields printing fresh record lows.

BoJ officials said to be considering applying negative rates to its lending program for financial institutions. (BBG)

PBoC set the CNY mid-point at 6.4898. vs. last close. 6.4810 (Prev. mid-point 6.4803). (RTRS)

PBoC injected CNY 240bln via 7-day reverse repos; for a net CNY weekly injection of 680bln vs. net injection CNY 70bln last week. (RTRS)

Japanese Manufacturing PMI (Apr P) M/M 48.0 vs. Exp. 49.5 (Prev. 49.1); largest productivity decline in 3 years. (RTRS)

EQUITIES/ FIXED INCOME

European equities have begun the final session of the week on the back foot, with major indices in the red. This follows on from the downside seen across the Atlantic in the US, while equity specific news did little to lift sentiment, with high profile Daimler among the worst performers this morning and Peugeot and Volkswagen also lower as the emissions saga continues to suffocate Co. shares. Despite the downside in equities, Bunds remain relatively unchanged on the day as the German benchmark continues to hover around the 162.50 level after the volatility seen yesterday due to the ECB meeting.

FX

A quiet morning in FX, but one which has clearly been favourable for the USD. Not too much volatility in the commodities, but we have seen the AUD and CAD on the back foot through the morning, but the lead driver has been USD/JPY. Gains have been largely based on the JPY perspective, where the run up to the BoJ meeting next week has been given an added ‘fillip’ as the central bank is said to be considering applying negative rates to its institutional lending program . USD/JPY rallied from sub 110.00 to 110.75, but in the options market, there has been strike buying for much higher levels. Stocks are on the softer side though – Dax is off 1% - but this has not had a major impact on the S&P futures as yet. Going against the grain is GBP, with the Cable rate proving resilient to upshifts in the USD index. EUR/USD is also grinding lower, but reluctantly after yesterday’s price action over the press conference. Data wise, Euro wide PMIs were pretty mixed – and largely ignored.

COMMODITIES

Oil prices have held on to the gains seen yesterday as investor sentiment remains at high levels, with a strong resistance level at USD 44.00/bbl cialis mit rezept. Gold sold off heavily after reaching the USD 1270/oz level after strength in the USD dampened sentiment. Elsewhere, copper prices were lower alongside yesterday’s commodity weakness, but are still on track for its best week in over a month, while Dalian iron ore continued on its recent ascent to print its highest level since September 2014.

A Senior Iranian official says new oil contracts model has been approved with a final draft ready to be presented in Paris in June or July. (RTRS)

Oil prices rise as investor sentiment turns upbeat as investor sentiment rises (RTRS)

Mid Valley pipeline (capacity 197k bpd) has shut its flow due to decreased power consumption being observed at all pumping stations. (Genscape)